Roku, Inc. (ROKU): A Bull Case Theory

We came across a bullish thesis on Roku, Inc. (ROKU) on wallstreetbets Subreddit Page by Adventurous-Date-397. In this article, we will summarize the bulls’ thesis on ROKU. Roku, Inc. (ROKU)’s share was trading at $82.03 as of Dec 5^th.

Roku’s real value lies in the data it collects, not just its devices. As the leading streaming TV distributor in the U.S., Roku reaches nearly 120 million people, with half of American households using its devices. Its audience surpasses the combined subscribers of the six largest traditional pay-TV providers, making Roku the #1 smart TV streaming operating system in the U.S., Canada, and Mexico. As of Q3 2024, the company boasts 85.5 million active accounts worldwide, marking a 12.8% year-over-year increase, with users spending an average of 246.8 minutes per day streaming. This extensive reach provides Roku with vast amounts of data on user activities, including the channels accessed, viewing times, and preferences, which is integral to its business model.

Roku collects detailed information on what users watch, including metadata on local files viewed through the Roku Media Player, as outlined in its privacy policy. This data, much like Google’s approach with its massive user base, is where Roku’s true value lies. While Roku’s devices are practically given away, the real money is in the data collected from millions of active users. This data allows the company to better target advertising and refine its services, creating a valuable asset that enhances its platform’s revenue potential. Applying the same market valuation multiples that Google has used, Roku could be worth around $37 billion, or $250 per share. However, given that the majority of Roku’s user base is in the U.S., its value could be even higher, potentially reaching $750 per share. This underscores Roku’s position as a data-driven powerhouse in the streaming and advertising landscape.

Roku, Inc. (ROKU) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held ROKU at the end of the third quarter which was 35 in the previous quarter. While we acknowledge the risk and potential of ROKU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ROKU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.