Roku (ROKU 0.11%) has been unstoppable so far in 2019. Stock for the pioneer of TV streaming devices has gained more than 326% so far this year and about 456% since its first-day closing price in September 2017. With this type of momentum, it can be difficult for analysts to make the right call consistently. Most of the time when they fall short, they simply move on.

That's why it's particularly notable when an analyst owns up to a dubious call. But that's exactly what RBC Capital Market analyst Mark Mahaney did recently regarding his firm's call in early July to downgrade Roku to "sector perform" (hold) from outperform (buy).

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"Our downgrade was ... wrong"

During an interview this week, Mahaney started by saying the firm was bullish on Roku earlier this year, but had adjusted its outlook in June. "We downgraded it July 1st," Mahaney said. Then came the mea culpa. "Our downgrade was clearly premature or, in other words, wrong." 

He went on to make a strong bull case for Roku:

[Roku is] a major beneficiary of the upcoming streaming wars. It is a launch partner for Disney (DIS -1.11%) for its Disney+ service ... There's also this play for them to move more into international markets, which has really been de minimis for them to date ... we think it's inevitable, we think it's likely near-term that they'll expand into Europe. The winds are definitely tailwinds ... They're one of the best growth assets in mid-small-cap internet.

The enthusiasm is warranted

While investors have been laser-focused on the subscription internet space led by Netflix (NFLX 1.78%), ad-supported streaming services have been gaining steam. A look at several of the players illustrates this trend.

Earlier this year, Hulu -- which is now controlled by Disney -- reported that its subscriber numbers surged past 28 million, gaining 3.8 million in the first quarter alone. That wasn't an anomaly, either, as Hulu added 8 million new subscribers last year, increasing the total to 25 million, up 48% year over year. This puts Hulu's customer counter ahead of the largest cable and satellite providers in the U.S.

At the same time, Roku's account growth has soared as well. Roku has added 3.4 million active accounts so far this year, bringing the total to 30.5 million. It ended 2018 with 27.1 million, up 40% compared to 2017. 

To put that into perspective, Netflix added 1.61 million to its U.S. subscriber base so far this year, including a rare decline in its subscriber numbers last quarter. That means its domestic business is growing at less than half the rate of either Roku or Hulu, which shows that the ad-supported streaming market is gaining traction.

A hand pointing a remote at a TV

Image source: Getty Images.

Show me the money

It isn't just the subscriber count that's growing. Roku has been flooding the market with inexpensive streaming devices and partnering with all comers in the connected TV market, all in an effort to get its platform in front of as many consumers as possible. That strategy is bearing fruit. Roku's platform revenue, which is primarily supported by advertising, grew 86% year over year during the second quarter, accelerating from 79% in the first quarter, 77% in the fourth quarter, and 74% in the third quarter

Roku's platform-agnostic stance allows the company to partner with paid streaming services like Netflix, Amazon Prime Video, and Disney+, while also offering access to free, ad-supported services like Crackle, Pluto TV, and Tubi -- and these are just a few -- there are dozens more available on its platform.

This all points to a bright future for Roku and a big opportunity for investors.