There's no doubt that investors are pleased with the Nasdaq Composite Index's 32% gain in 2023 (as of Aug. 14). After a double-digit drop last year, the market's impressive run is certainly being cheered. 

But there are some stocks that have performed even better than the index. Take Roku (ROKU 1.35%), for example, whose shares have doubled in 2023. It appears as though investors are comfortable owning growth tech stocks once again, pushing up the valuations of these types of businesses. 

Let's take a closer look at Roku's financial results this year, as well as a bull and bear case for the stock. This should give potential investors greater insight into what to do with the stock after its recent surge. 

Better-than-expected financials 

During the first three months of 2023, Roku posted revenue of $741 million and a loss per share of $1.38. And for the most recent quarter (the second quarter of 2023, which ended June 30), the streaming business registered sales of $847 million, while the loss per share totaled $0.76. Both the top- and bottom-line figures exceeded Wall Street analyst expectations for both quarters, positive surprises that can do wonders for any stock. 

It's encouraging to see that revenue growth in Q2 of 11% was much higher than the 1% clip of the first quarter. This means that maybe the macro headwinds that have derailed the digital ad market are coming to an end. Roku, which derives nearly 90% of overall sales from its ad-driven Platform segment, could stand to benefit in an improved economic environment. 

At the start of 2023, Roku shares traded at a price-to-sales (P/S) ratio of 1.8. Since then, the valuation multiple has soared to 3.6, indicative of the investor enthusiasm surrounding the company's latest quarterly numbers, as well as general risk-on sentiment. Nonetheless, the stock is still significantly below its trailing average P/S multiple of 10.7. 

Bull and bear arguments 

Despite the stock's powerful momentum, investors need to consider both sides of the aisle with this business. Only then can a more thorough understanding be obtained. 

On the one hand, the bull case couldn't be more obvious. Roku has been and will continue to keep benefiting from the rising popularity of streaming entertainment. At its peak in 2014, there were over 100 million cable-TV households in the U.S., a figure that is estimated to fall to just 60 million this year. With consumers flocking to the affordability, convenience, and wide selection that content companies like Netflix, Walt Disney, and Amazon offer, the cord-cutting trend isn't surprising. 

As a neutral platform that allows viewers to have access to all their favorite content in one place, Roku is in an advantageous position as the industry grows. It currently has 73.5 million active accounts, up 16% year over year, with a leading smart-TV market share in the U.S. 

But the bear case is also worth taking the time to think about. Probably the most pressing issue is the company's lack of profitability. Roku's net loss totaled $301 million through the first six months of this year after posting a net loss of $498 million in 2022. Amid an ongoing economic backdrop characterized by heightened uncertainty, with the possibility of a recession an important risk to consider, investors might be prioritizing businesses that generate positive free cash flow in this kind of environment. 

Moreover, Roku competes with companies that have greater financial resources and scale than it does. For example, it goes up against Amazon, Alphabet, and Apple in the market for smart-TV media sticks. Those are some formidable opponents that Roku must constantly be worried about. 

Investors have a lot to think about before deciding to buy, sell, or hold this streaming stock. Hopefully, by now, the decision will be a bit more informed.