What Happened?
Shares of streaming TV platform Roku (NASDAQ: ROKU) jumped 6.1% in the morning session after the company reported better-than-expected fourth-quarter results and provided an optimistic financial outlook.
The streaming TV platform reported a GAAP profit of $0.53 per share, a significant turnaround from a loss of $0.24 per share in the same period last year and well ahead of analysts' estimates of $0.28. Revenue grew 16.1% year over year to $1.39 billion, also beating Wall Street's expectations. Looking ahead, Roku guided for first-quarter revenue of $1.2 billion at the midpoint, which was above consensus. Furthermore, its full-year 2026 EBITDA forecast of $635 million at the midpoint also surpassed analysts' projections, signaling confidence in its future profitability.
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What Is The Market Telling Us
Roku’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 15.7% on the news that the company reported strong fourth-quarter 2024 results that easily cleared analysts' sales, EBITDA, and earnings expectations.
Revenue grew 22% year on year, driven by a 25% increase in platform revenue, which benefited from higher advertising demand, including political ad spending, and deeper third-party platform integrations.
However, its revenue outlook for the next quarter and the full year merely met Wall Street's expectations, raising questions about the staying power of platform revenue growth, especially as political ad spending recedes in 2025. The profit outlook was more encouraging as full-year EBITDA guidance came in well above Wall Street estimates.
Still, we think this was still a solid quarter with some key areas of upside. Following the impressive performance, Wells Fargo upgraded the stock's rating from Hold to Buy, adding, "We walk away from 4Q′24 much more bullish on [forward] upside driven by inventory growth, homescreen innovation and political tailwinds in' 26/'28.".
Roku is down 19.8% since the beginning of the year, and at $87.20 per share, it is trading 24% below its 52-week high of $114.68 from January 2026. Investors who bought $1,000 worth of Roku’s shares 5 years ago would now be looking at an investment worth $185.65.
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