The market was finally happy with Roku's (ROKU 0.34%) performance in the 2024 fourth quarter, and Roku stock is up 33% so far in 2025. Smart investors bought when it was on the outs with the market and are now benefiting from having confidence in this top company. But can $10,000 invested in Roku stock still make you a millionaire? Let's check it out.
Roku makes streaming happen
Roku is the top streaming operating system (OS) in the U.S., Canada, and Mexico. Its devices are sold more than any other, including Amazon's, and including Walmart's recently acquired Vizio, which caused so much trouble for Roku stock last year when the announcement spooked the market.
In Q4 2024, it had 89.8 million households, a 12% increase year over year and up from 85.5 million in the previous quarter. After several quarters of flat or decreasing average revenue per user (ARPU), it's back on the rise, up 4% year over year in Q4 for the trailing 12 months. The market's been waiting for that, and it implies that ad spend is catching up to and even surpassing user growth. Since the platform segment accounts for much more revenue than the device segment -- 86% of the total in Q4 -- that's great news.
As more people become a part of its ecosystem by buying a device and becoming a member, Roku has more people viewing its free channels and the ads that support them. This is the traditional broadcast viewing model that ad-supported streaming has usurped, and it's the next stage of free viewing content. Roku is a leader here and is benefiting from cord-cutting and the shift toward free streaming.
NASDAQ: ROKU
Key Data Points
Consider that all the top premium streamers, including Netflix, Disney, and Amazon, have launched ad-supported tiers over the past few years, and they're all doing well. Roku gets a cut of that when viewers are watching on its platform. But its owned Roku Channel is where a lot of the growth is happening. Total streaming hours increased 18% year over year in Q4, and 82% on the Roku Channel.
Roku's biggest problem right now is that it's not profitable. But it's moving closer. In Q4, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 62% year over year and was positive for the sixth straight quarter. Net loss was $35 million, improved from $78 million last year.
Street analyts don't expect Roku to become profitable on a generally accepted accounting principles (GAAP) basis this year, but it could happen as early as next year as it scales and streaming continues to grow. Wall Street is expecting positive earnings in 2026. From there, earnings could continue to increase along with revenue. Management is taking many actions to keep revenue increasing, from growing partnerships with advertisers to expanding internationally.
How high can Roku stock go?
Turning $10,000 into $1 million implies a 10,000% increase. Early stage tech companies have done it faster than others, but it's rare for this to happen quickly. This is a long-term strategy, even for top growth stocks.
I'm not sure Roku can pull that off, even as it grows steadily and moves toward turning a profit. It reported $4.1 billion in 2024 revenue, an 18% increase year over year. If it would increase at a compound annual growth rate of 10% over the next 20 years, which is likely a stretch, it would have about $27 billion in annual sales, or close to eight times today's figure. Even if it's highly profitable at that point, it's hard to imagine the stock increasing 10,000%. It's hard to imagine that happening even in an unreasonable timeframe.
However, you don't need a stock to gain that much for it to be valuable. You're certainly lucky if you find one that does, but it's not easy. What's more valuable is selecting a broadly diversified portfolio of stocks, and if you have an appetite for risk, you can focus more on growth stocks. Roku can add value as an element of a growth-focused portfolio. If even one of your stocks gains 10,000%, that's great, but even if it doesn't happen, you'll be in excellent shape.
