Roku (ROKU) Stock Forecast & Price Target

Roku's stock outlook is positively influenced by its significant presence in the streaming industry, with the company accounting for 6.1% of total streaming time, reflecting a year-over-year increase of approximately 1.7 percentage points. The firm's platform revenue is projected to grow to $4.75 billion, fueled by a combination of subscription fees and ad revenues, supported by the rising engagement from streaming hours and the success of The Roku Channel. Additionally, Roku's guidance indicates an expected expansion of approximately 200 basis points in EBITDA margins by 2026, suggesting strong operational leverage and a focus on generating free cash flow, positioning the company for robust profitable growth in the future.

Roku faces significant challenges that may negatively impact its financial outlook, primarily due to the current volatility in the advertising market, which could lead to a deceleration in revenue growth from an estimated 19% in 4Q25 to approximately 12% in 1Q26. The company's reliance on a loss-leader strategy for its Devices business raises concerns about widening losses, especially in an environment where component costs may increase and competitive pricing pressures intensify. Additionally, the rising content costs associated with The Roku Channel could compound margin pressures, particularly if a broader macroeconomic slowdown negatively affects advertising budgets beyond the media and entertainment sector.