What happened

Roku (ROKU 1.00%) investors beat the market early Friday as shares jumped 4% by 11:15 a.m. ET, compared to a flat result for the S&P 500. That boost didn't erase much of the year-to-date losses for the streaming video specialist, though. The stock remains lower by nearly 80% so far in 2022.

Friday's rally came as investors grew more optimistic about the short-term growth prospects in the industry.

So what

Rival Netflix saw unusually high demand for its stock Friday morning after the subscription streaming video leader received a few head-turning upgrades. An analyst at Wells Fargo raised his price target for the stock to $400 on the expectation of faster growth and gushing cash flow ahead. Netflix received a similar upgrade from an analyst at investment firm Cowen.

Roku has a different business model, relying more on advertising over subscription payments. But good news for the streaming industry would still likely translate into good news for Roku's efforts to gain users and attract more advertisers to its platform in 2023.

Now what

Roku has its work cut out for it, even if industry conditions start to stabilize next year. Sales are on track to fall by nearly 10% in the fourth quarter, management said in early November, and losses will expand. It might take several quarters for the company to get spending back in line with its lower growth profile. Roku is also hoping to diversify its business over time so that it isn't so dependent on the digital advertising industry.

Investors might want to wait for more concrete evidence of these initiatives working before jumping into the stock right now.

Rival Netflix looks more attractive today given its positive earnings and cash flow, along with its huge global scale. But Roku may still benefit from the same encouraging industry trends that seem to be reaccelerating Netflix's growth here in late 2022.