Roku (ROKU +0.05%) is a well-known streaming service that powers TVs and streaming devices while distributing content from services like Netflix (NFLX -0.34%), Disney (DIS +0.58%), and its own ad-supported Roku Channel.
Its lower-margin devices business helps attract users, but the platform segment, driven by digital ads and revenue-sharing with streaming services, generates the majority of revenue. Roku went public in 2017 and has become one of the most widely used TV operating systems in North America.
How to buy Roku stock
Roku stock is publicly traded, so you can buy shares of the business like any other stock. Here are important steps to follow if you want to buy shares of Roku stock.
- Step 1: Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Step 2: Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Step 5: Submit your order: Confirm the details and submit your buy order.
- Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should you invest in Roku?
Roku is best viewed as an advertising and platform business, not a hardware company. While growth slowed after the pandemic and device sales have struggled, Roku remains well positioned as ad spending continues to shift from traditional TV to connected TV (CTV).
The company benefits from scale, with more than 90 million active accounts and leading market share as a TV operating system in the U.S., Canada, and Mexico. Roku is also strengthening its ad ecosystem through integrations with platforms like The Trade Desk, which could support long-term ad pricing and demand.
Risks remain. Advertising is cyclical, competition is intense from players like Amazon (AMZN -0.03%) and Apple (AAPL -0.21%), and the devices segment continues to weigh on results.
Bottom line: Roku may appeal to long-term growth investors who believe in the continued expansion of streaming and connected TV advertising. It’s less suitable for conservative investors or those seeking dividends.
NASDAQ: ROKU
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The bottom line
Roku is a leader in a growing industry and has recently improved its financial performance with a switch back to profitability, alongside its growing revenue from its core advertising business. For growth investors willing to tolerate a healthy level of risk from fluctuations in advertising spend and the increasingly competitive nature of its industry, Roku could pose a rewarding long-term investment.
However, the entertainment stock is not without risk, and it is best incorporated as part of a well-diversified portfolio.
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