The market was a pretty ugly place on Friday, but one of the few winners was Roku (ROKU -2.73%). Shares of the company behind the original streaming hub traded as much as 11% higher on Friday after posting strong quarterly results. Those upticks were whittled away to a mere 1% gain when market prices started to collapse, but Roku was one of the rare growth stocks to wrap up the challenging trading day in positive territory.

Roku stock has been hit hard since peaking last summer, but the sell-off has been accelerating since Netflix (NFLX -0.04%) stunned the market by posting a sequential decline in global streaming accounts two weeks ago. Roku may have been seen by many as a niche disruptor riding on the coattails of Netflix, and that was fine when the leading premium streaming service was rocking. Now that Netflix is going through some growing pains it's comforting to know that Roku has its own coat.

Someone smiling while channel surfing.

Image source: Getty Images.

Roku like a hurricane

Roku needs a new publicist. Even after last week's model-affirming first quarter, the stock has plummeted more than 20% in the eight trading days since Netflix fumbled this earnings season. Roku stock enters this new trading week 81% off the all-time high it set in late July of last year. It's not fair.

The country's leading operating system for streaming video on TV is still expanding. Roku now has a record 61.3 million active accounts, a sequential increase of more than a million homes, and a welcome contrast to Netflix shedding 200,000 net members through the first three months of this year. 

Roku's audience also experienced a 14% increase over the past year. Remember when the most problematic knock on Roku was that folks would be streaming less after COVID-19 vaccines became freely available? A record 20.9 billion hours were spent streaming on Roku in its latest quarter, a 14% increase over the past year that matches its increase in accounts. In short, we're streaming as much as we were a year ago. 

Then we get to Roku's ability to monetize its platform. Netflix has had to resort to price hikes to keep average revenue per user rising, but Roku's platform is a free ad-based model. With services vying for the attention of Roku's widening audience -- and Netflix now proving mortal -- you can expect a lot of connected TV ad revenue going Roku's way. Average revenue per user for Roku has soared 34% over the past year, and that's stacked on top of the expanding account base. 

Netflix also spooked investors with problematic guidance. Roku didn't fall into that trap late last week. Roku sees revenue growth decelerating to 25% for the current quarter, but it's still confident of closing out the year with 35% in top-line gains. Worrywarts can argue that Roku is being aggressive by maintaining its guidance for all of 2022. Is it fair to continue to target 35% in full-year revenue growth after clocking in at just 28% in the first quarter and aiming for just a 25% uptick for the second quarter? Yes. Roku expected 35% growth this year three months ago when it was forecasting just $720 million in revenue for the first quarter. It came through with $733.7 million on the top line.

Roku isn't perfect. Bottom-line and hardware challenges remain. However, investors should expect better days from one of the best streaming service stocks. To be fair, it can't get much worse.