Streaming specialist Roku (ROKU -10.29%) did not start the year on a strong note. Things have only worsened since early January: The company's shares dropped following its fourth-quarter earnings report. As things stand, Roku's shares are down by 29% year to date and are trading for just under $65 apiece. However, there are good reasons to remain bullish on Roku. Find out why the company's stock is still worth buying.

Some worrying signs in Roku's report

At first glance, Roku's fourth-quarter results weren't bad at all. The company's revenue increased by 14% year over year to $984.4 million. Active accounts hit 80 million, 14% higher than the year-ago period, while Roku's viewing hours came in at 29.1 billion, a 21% year-over-year increase. Viewers spent over 100 billion hours streaming on Roku last year.

However, it wasn't all sunshine and rainbows for the company. On the bottom line, Roku delivered a net loss per share of $0.55, although that was also an improvement over the net loss per share of $1.70 recorded in the year-ago period. Still, investors have been less forgiving of unprofitable growth-oriented companies in the current economic environment marked by higher interest rates.

There was another problem with Roku's performance: The company recorded an average revenue per user (ARPU) of $39.92, down 4% year over year. A declining ARPU could indicate that Roku is dealing with increased competition that will limit its growth potential over the long run.

Why Roku is a buy anyway

Roku increased its revenue despite a declining ARPU thanks to a growing ecosystem. It isn't just that the company gained more users. Engagement is moving in the right direction. Roku displays the network effect, a powerful competitive advantage. The more users on its platform -- and the more time they spend glued to their screens -- the more it becomes a valuable target to advertisers.

Roku's moat can help it remain successful despite the competition. We can see evidence of this by looking at the company's track record. Despite being one of the oldest players in the connected TV (CTV) devices market, it still leads the pack in North America and Latin America. One of Roku's longtime challengers is Amazon.

The streaming specialist is holding its own against this giant. That's partly why investors shouldn't worry too much about another major corporation, Walmart, recently making a move in this market. Here's another great thing about Roku's business: There remains a massive worldwide opportunity in streaming. Consumers are slowly but surely phasing out old-school TV broadcasting solutions like cable, satellite, and rabbit ears.

Streaming is the more convenient and versatile mode of entertainment. That's why even legacy cable companies have turned to this market. They can hardly survive without it. The more people spend time streaming, the more Roku's ecosystem will strengthen and attract advertisers away from cable. The result should be continued revenue growth.

It's true that Roku has slowed in this category in recent years, but that's par for the course as the company gets bigger. On the bottom line, Roku instituted important cost-cutting measures in recent years. The company is committed to increasing profitability and free cash flow over the long run. Long gone are the days of growth at all costs.

Can Roku bounce back this year? Hard to say. A lot could happen that could keep its stock price down, whereas a pleasant surprise in an upcoming earnings report could send shares soaring. Predicting how any company will perform in the next six months to a year is always tricky. However, Roku's leadership in the CTV market, the opportunities in the streaming industry, and the company's network effect paint a bright future.

Investors willing to be patient should strongly consider buying the company's shares, especially at current levels.