Changing consumer and business trends have taken many stocks to parabolic highs over the last few years. Roku (ROKU 4.37%) is one that achieved such peaks in the 2021 bull market, only to pull back. Although many of these stocks recovered and achieved new highs, Roku has failed to break out of the trading range following the bear market in 2022.
However, the company has grown its user base and streaming hours consistently for years. Amid the transition from traditional to streaming TV, can Roku achieve a parabolic high in 2026, or is it doomed for more stagnation?
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Roku's growth prospects
Roku has brought years of disappointment as ongoing losses and the prospects of competition from tech heavyweights like Amazon and Alphabet weighed on the stock.
With that, Ark Invest's price target of $605 per share by 2026 appears overly optimistic. Still, Roku remains Ark Invest's second-largest holding. Also, it is the No. 1 streaming platform in the U.S., Canada, and Mexico and has continued its expansion efforts in the rest of Latin America and Europe. Those factors should make it a larger player in the TV ad market over time.
Additionally, investors should note that one factor could deliver Roku its long-awaited catalyst: a return to profitability. Roku has reported losses since falling out of profitability in 2022. Still, income from unrealized gains and foreign currency remeasurements made it profitable in the second quarter of 2025.
Moreover, Roku's management expects full-year profitability next year. This is critical as losses often discourage investors from buying, particularly after a pullback like the one in 2022.
Furthermore, even without a P/E ratio, the price-to-sales (P/S) ratio of 3.1 is just under the S&P 500 index average of 3.3, making it a bargain for investors.
Ultimately, a return to profitability could highlight that valuation. As its sales multiple increases, it could propel the stock in a parabolic direction, bringing shareholders a long-awaited recovery.
