In many ways, Roku (ROKU +0.87%) could be described as the Rodney Dangerfield of streaming; it doesn't get any respect. However, while investors weren't looking, the growth stock got its mojo back, soaring 65% over the past year (as of this writing).
Perhaps more importantly, the company has expanded beyond its industry-leading streaming platform and implemented new growth strategies that are beginning to pay off.
Image source: The Motley Fool.
Howdy, y'all
Late last year, the streaming pioneer made a calculated decision to launch a paid streaming channel, dubbed "Howdy." This subscription video-on-demand (SVOD) service debuted in August for just $2.99 per month, catering to price-sensitive customers. At the time, Roku noted that the service's library featured thousands of titles and 10,000 hours of entertainment, including programs and movies from Lionsgate, Warner Bros. Discovery, and FilmRise, as well as select Roku originals.
Skeptics immediately panned the service as just another subscription to manage and lacking in first-run movies. Now, just eight months later, that relatively modest bet appears to be paying off. Estimates suggest that Howdy has surpassed 1 million subscribers, according to a report by analytics company Antenna.
The data suggests Roku's platform was a significant driver of growth, as 23% of subscribers came via The Roku Channel, the company's ad-supported offering. Retention is also respectable, with 51% of initial viewers still subscribed after six months. For context, only 47% of premium SVOD services survive the six-month threshold. While it might not seem like much, this adds to Roku's growing advantage.
Then there's The Roku Channel -- the company's free, ad-supported streaming service. It ended 2025 with a 3% share of all TV viewership, according to Nielsen, placing it in the Top 10 among media companies and ahead of other streaming providers, including Paramount+, Comcast's Peacock, Fox's Tubi, and Warner Bros. Discovery. The Roku Channel was also ranked No. 2 on the company's platform in terms of engagement.
Just last week, Roku announced that it had surpassed 100 million streaming households worldwide. The company also commands a 55% market share of streaming devices in the U.S.
NASDAQ: ROKU
Key Data Points
Taken together, the growth of Howdy, the ongoing success of The Roku Channel, and the company's expanding worldwide influence suggest Roku has taken all the right steps to position itself for future growth.
What the future could hold
Roku is scheduled to report its first-quarter financial results after the market close on Thursday, and the future looks bright. Management's forecast calls for revenue to grow 18% year over year to $1.2 billion, while swinging from a net loss of $27 million to a profit of $50 million. If the company delivers, this will mark the fourth consecutive quarter of profitability, a significant milestone in the company's recovery.
Wall Street is equally bullish, as analysts' consensus estimates call for revenue of $1.2 billion and adjusted earnings per share (EPS) of $0.35.
At 35 times next year's expected earnings, the stock commands a premium. However, if the company continues to deliver on its promise, Roku's current valuation could turn out to be a bargain.
For my money, Roku stock is a buy.
