Roku (ROKU -10.29%) has been a huge winner in 2023, as shares have soared 70% this year (as of Sept. 22). But since the start of August, the stock has tanked 29%. 

At a current price-to-sales multiple of 3, which is close to the cheapest valuation in Roku's history, it's understandable that investors would feel the need to rush to take advantage of this opportunity. But it's best to grab the remote and press pause right now. 

To gain a rounded understanding of this streaming stock, let's look at one compelling reason Roku is a screaming buy before considering why investors should avoid buying shares. 

Positioned to benefit from streaming's growth 

The streaming industry was pioneered by Netflix, which today has nearly 240 million subscribers. There are also major media corporations like Walt Disney, with its main streaming service called Disney+ that has become a formidable player in the industry. These companies get a lot of attention because of their size. But they must constantly spend tens of billions of dollars each year to produce fresh content to attract new subscribers. 

Roku's business model is unique. It has created the most popular smart TV operating system in North America that aggregates all the various streaming services out there. Viewers find value in this because of the sheer number of choices out there. What's more, Roku's connected-TV platform draws advertisers who want to meet these consumers where their attention is going. 

Even in an uncertain economic time, the business was able to increase active accounts by 16% year over year to 73.5 million in the latest quarter (second quarter of 2023, ended June 30). And while there was a notable slowdown from previous years, revenue was also up 11%. 

At a high level, it's not difficult to see that Roku stands to continue benefiting as streaming entertainment takes over from traditional cable TV. Data from eMarketer shows that there are now more households without a cable subscription than with one, a trend that still has a long way to go. With a leading market share in the U.S., Roku's revenue is set to receive a boost. 

As a result, Roku's competitive positioning makes the stock worthy of investment consideration for those looking to allocate capital behind this secular shift. 

Competition from tech heavyweights 

With any major growth trend, it's likely that competition will likely be fierce. And that is certainly the case for Roku. 

When looking at pure platform competitors, namely those businesses that offer smart TV media sticks and/or TVs, as well as develop the internal software that allows consumers to combine all of their streaming options in one easy-to-use interface, Roku faces stiff competition from some deep-pocketed, well-resourced tech titans. 

Apple's Apple TV, Amazon's Fire Stick, and Alphabet's Chromecast all go head-to-head with Roku's offerings. While Roku has the lead here in the lucrative U.S. market, it's a different story internationally. For example, Alphabet has a greater market share on a global level. 

The positive spin is that this is Roku's entire business model and revenue driver, so the leadership team is singularly focused on bolstering its presence in the streaming landscape. This means there are no other distractions. 

This might not be the case with the tech giants. Apple's bread-and-butter are its popular hardware products. For Amazon, growing e-commerce revenue and maintaining its lead in the cloud computing market are priorities. And for Alphabet, which has the digital advertising expertise to give Roku a run for its money when it comes to attracting ad dollars, it's trying to keep its stranglehold on the worldwide search market. 

Nonetheless, we can't ignore that Roku faces heightened competition from numerous rivals that might have better access to capital, tech talent, and other resources. And this should give investors pause before buying the stock.