Why 2025 Could Be a Make-or-Break Year for Roku Stock

Core Viewpoint - Roku's stock has significantly declined over the past five years, with a current return of -40%, primarily due to increased competition in the streaming market and a shift in consumer behavior post-pandemic [1] Group 1: Business Performance - Roku has diversified its business by launching new products, including smart home devices and its own TVs, but this transition has not been successful so far [2][3] - The company has reported a net loss in each of the past four quarters, raising concerns about its earnings trajectory as it shifts focus to lower-margin hardware sales [4][6] Group 2: Upcoming Earnings and Market Conditions - The upcoming earnings report in February 2025 is critical for Roku, particularly its performance during the Black Friday shopping period, which could indicate the health of its business [5][6] - Investors should monitor whether Roku can achieve significant revenue growth while improving gross profit margins, as failure to do so may confirm negative trends in the business [6] Group 3: Competitive Landscape - Walmart's acquisition of Vizio poses a potential threat to Roku, as Walmart aims to expand its advertising business and leverage Vizio's SmartCast operating system, which has 19 million active accounts [7][9] - Despite Roku's larger audience of 85.5 million streaming households, increased competition from Walmart could hinder Roku's growth in both platform and device revenue [8][9] Group 4: Investment Outlook - Roku's stock has fallen approximately 9% year-to-date and is currently trading at three times its trailing revenue, which is not considered expensive; however, the lack of profitability and emerging competition from Walmart raises concerns about future performance [10] - Investors may be advised to remain cautious and observe Roku's performance in the coming quarters, as well as Walmart's strategic moves regarding Vizio, to better assess the competitive landscape [11]