Even taking into account a recent slump, Roku (NASDAQ:ROKU) has delivered an impressive stock run so far this year. The company's shares are up by about 247% since early January, shattering the performance of the broader market and that of the S&P 500.

Roku's meteoric rise is no doubt noteworthy, but now for the million-dollar question: Can the company keep up this pace -- or anything close to it -- over the long run? After all, past success isn't a guarantee of anything. Investors who are a bit late to the show will want to know whether the streaming company will eventually fizzle out and crash or whether its performance is backed by a sustainable business model.

How Roku generates revenue

To begin with, it's important to understand how Roku actually makes money. The company's revenues come from two sources: the sales of digital media boxes (which are recorded in its player segment) and advertising sales, commission sales, and other services (which all fall under its platform segment). Though Roku's player segment originally accounted for the majority of its revenues, that situation has now reversed. Further, the company's platform segment has also been growing at a much nicer clip. Roku's second-quarter results were yet another testament to this fact.

Multiple screens showing streaming media.

IMAGE SOURCE: GETTY IMAGES.

While the company's player segment revenues only grew 24% year over year, its platform revenues soared by 86% over the same period.

Roku's focus on various services other than the sale of media boxes has proved to be a shrewd strategy, and there are still scores of opportunities it can pursue along those lines. These include Roku's partnership with various TV manufacturers that use the company's operating system (OS) on their connected TVs. According to the company's own estimates, more than 33% of smart TVs sold during the first half of the year were Roku TVs. Even if sales of Roku's signature namesake media boxes eventually drop significantly, the increasing popularity of Roku TVs will make up for this decline by allowing the company's OS to find its way to the consumers. 

Is Roku's market growing?

A recent report showed that 39% of U.S. households own a streaming media player. To no one's surprise, Roku is the market leader in this category, with Amazon coming in second. The two companies account for about 70% of streaming devices in the U.S. What's a bit more concerning, though, is that the percentage of U.S. households that own a streaming media player only increased by 1% since 2018.

Fortunately, this may not be as big a problem as it seems. Roku has already built a network of customers that it can leverage in a thousand different ways to grow its earnings. Roku boasts about 30.5 million accounts and recorded 9.4 billion streaming hours during the second quarter. This puts the company in a strong position to negotiate deals with other streaming services and especially with advertisers. On this point, it is worth quoting the company itself in its most recent earnings report: "The most successful digital ad platforms are built on three ingredients: a coveted audience, reach at scale, and proprietary data to drive results for marketers. Roku possesses all three."

Should you buy at current levels?

Though Roku seems to have the tools to be a winner in the long run, the company currently trades at about 12.8 times past sales. However, since Roku recently shed about 40% of its value, now may be an opportune time to consider buying its shares, at least for those willing to pay a somewhat hefty premium for the opportunity.