I see plenty of long-term winners in the streaming media industry. However, the whole sector came crashing down in 2022 as marketers hit the brakes on their digital ad spending.

The sharp share price correction in this sector has been uncomfortable for investors, but there's an upside to the pain, too. Many of the media-streaming companies that saw their shares fall by 50% or more in 2022 will surely survive this crisis and thrive in the long run. So if you dare to buy when everyone else seems to be selling, you'll find a truckload of opportunities.

The  business models of streaming technology powerhouse Roku (ROKU 0.05%) and live-sports streamer fuboTV (FUBO -0.81%) are radically different, but they have a few things in common. Roku's stock is trading 92% below its two-year highs, and fuboTV is down by 97%. If you buy these shares today, a simple recovery to their 2021 levels would multiply your investment by 10x or more.

Demanding a tenfold return on your investment sounds a bit arrogant, so let's set our sights a bit lower. Will Roku and/or fuboTV deliver five-bagger gains anytime soon?

Short-selling interest

First things first. How likely are these companies to make it through the current downturn?

Apparently, many investors expect these stocks to drop even lower. The number of shares borrowed by short-sellers has increased for both fuboTV and Roku in 2022, even as share prices plunged. Nowadays, nearly 9% of Roku's shares are actively bet against the stock. The short-interest percentage for fuboTV stands even higher at 22%.

To put these data points into perspective, Walt Disney (DIS -1.52%) only has 1% short interest, and Netflix's (NFLX 0.87%) short interest clocks in at 2%. High short-selling interest often points to high volatility, with a lot of people betting their cold, hard cash that the next big move will be another leap downward. So if you're looking for a tranquil investment in the streaming space, you'd probably be better off with Disney or Netflix right now. (Yes, I know that Netflix and Disney have been through their own challenges in 2022, but I can still call them out as safe havens with a straight face.)

Financial health

However, I'm not sure where the resolute negativity around Roku and fuboTV is coming from.

Despite the advertising market's headwinds, Roku delivered year-over-year sales growth of 12% in the third quarter. The company also nearly doubled its budget for sales and marketing, which you don't see too often from a company in deep financial trouble. Its balance sheet holds $2 billion in cash equivalents and no long-term debt to speak of. This company is equipped to handle years of cash-burning market challenges and come out on the other side of that rough patch smelling like roses.

By contrast, fuboTV is more exposed to the economy's vagaries. It's much smaller and younger, with a less robust balance sheet. Its cash reserves add up to just $201 million, balanced against $395 million in long-term debt. According to the cash-flow statements, fuboTV has consumed $361 billion of free cash flows over its last four reported quarters. The company issued new shares on the open market in the first quarter of 2022, raising $204 million to avoid a cash crunch. That's not a tremendously shareholder-friendly thing to do, as stock sales have diluted previous fuboTV shareholders by 35% over the last year. Still, the company appears prepared to raise more cash if that's what it takes to make it through the downturn.

What it all boils down to

These streaming industry neighbors have a lot in common, but they are very different investments.

In Roku, I see a downtrodden stock attached to a fundamentally healthy business that should return to generating positive cash flows in short order. If and when the company proves its mettle to analysts and investors, its share prices should rise convincingly. A five-fold return on today's investment would bring the stock back to prices last seen roughly one year ago.

From there, share prices should continue to climb in the long run. Roku is a proven leader in the field of user-friendly streaming platforms, and I expect big things from this stock in the long run. And that long journey must start with a small step, quite possibly including a five-bagger gain in 2023.

I think fuboTV could also see dramatic gains next year, even in a rocky market environment. However, its chart will be more volatile than Roku's, with plenty of temporary jumps and drops along the way. I wouldn't be surprised to see fuboTV's stock double or triple in a single day after a great earnings report, only to lose it all if the next report shows an ounce of weakness. Furthermore, fuboTV might attract buyout bids if the stock stays ultra-cheap for much longer.

With an enterprise value of just $469 million (versus $3.9 billion for Roku), fuboTV could give larger companies like Disney, Netflix, or even Roku an instant foothold in the streaming market for live sports. An acquisition would offer investors a short-term upside but also put a cap on the stock's long-term gains. So fuboTV may very well gain 400% next year, but it could also drop back in a hurry or continue to move downward instead.

Roku is the better bet for a sustained 5x return

That's why I own some Roku shares and continue to add to my position as my own cash flow allows, but I haven't even nibbled on fuboTV's riskier stock yet.