This is a step-by-step stock review to answer the question, is Roku (ROKU) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Roku (ROKU) stock a good buy?
1. Roku Company History
- Founded in 2002: Roku was founded by Anthony Wood in Palo Alto, California, with a vision to revolutionize how people access and stream entertainment.
- Pioneered Streaming Devices: In 2008, Roku introduced its first streaming player, one of the earliest devices to stream Netflix directly to TVs, marking a major shift in home entertainment.
- Rapid Growth and Popularity: Roku’s affordable and user-friendly devices quickly gained popularity, leading to partnerships with major content providers and TV manufacturers.
- IPO in 2017: Roku went public on NASDAQ under the ticker symbol ROKU, further establishing itself as a leader in the streaming industry.
- Expanding Ecosystem: The company expanded beyond hardware to include the Roku Channel, offering free and premium content, and launched its own operating system, integrated into smart TVs.
- Global Reach: Roku became a household name, with millions of active users and a presence in multiple countries, dominating the streaming device market.
- Innovation and Leadership: Today, Roku continues to lead in streaming technology, constantly innovating with new features, services, and partnerships.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Overpriced
- Score: 33
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Roku makes money:
- Streaming Device Sales: Roku generates revenue from selling its streaming devices, such as Roku sticks and Roku TVs, which allow users to access various streaming services.
- Advertising Revenue: The company earns money from advertising displayed on its Roku Channel and other ad-supported content on its platform.
- Subscription Services: Roku makes money through partnerships with streaming services, earning a share of subscription fees or revenue from users who subscribe to services via Roku’s platform.
- Platform Revenue: Roku collects fees from content publishers and service providers for being featured on its platform, including data analytics and promotional services.
- Licensing Fees: The company earns from licensing its operating system and technology to TV manufacturers and other hardware partners.
- Content Partnerships: Roku collaborates with content providers and distributors, sometimes earning revenue from exclusive content deals or distribution agreements.
Here are a few of the other companies that Roku has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Content Studio (Acquired to produce original content)
- Dataxu (Advertising technology company)
- Rights to Quibi’s content library
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Roku stacks up against other companies.
- iQIYI, Inc.(IQ) – 83
- Netflix, Inc.NFLX – 78
- AMC Networks Inc.(AMCX) – 72
- Dave & Buster’s Entertainment, Inc.(PLAY) – 67
- Anghami Inc.(ANGH) – 61
- Roku, Inc.(ROKU) – 33
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Founded Roku in 2002: Anthony Wood started Roku with the vision of making streaming simple and accessible for everyone.
- Launched the First Roku Player in 2008: He introduced the first Roku streaming player, one of the first devices to stream Netflix directly to TVs, revolutionizing home entertainment.
- Pioneered Streaming Technology: Wood led Roku to become a pioneer in the streaming industry, creating an easy-to-use platform that quickly gained popularity.
- Expanded Roku’s Product Line: Under his leadership, Roku expanded its product offerings to include a range of streaming devices and smart TVs, making the Roku platform widely available.
- Took Roku Public in 2017: Anthony Wood successfully took Roku public on NASDAQ, providing the company with the capital to continue its growth and innovation.
- Built a Leading Streaming Platform: Wood grew Roku into one of the most popular streaming platforms globally, with millions of active users and a strong presence in the smart TV market.
- Innovated with Advertising and Content: He expanded Roku’s business model by developing an advertising platform and launching The Roku Channel, offering free and premium content to users.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Roku (ROKU) is 41/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Roku (ROKU) stock a good buy?
Some of the top questions investors can have is Roku (ROKU) stock a good buy or should I buy Roku (ROKU) stock?
Roku is a promising investment for several reasons. As a leader in the streaming device market, it provides a user-friendly platform connecting millions to popular services like Netflix and Hulu. With the increasing shift to streaming, Roku’s user base continues to expand, boosting revenue from ads and subscriptions.
Roku’s investment in original content enhances viewer engagement and loyalty, while its growing advertising business attracts more advertisers seeking a diverse audience. However, competition from giants like Amazon and Google poses risks to Roku’s market share.
Overall, Roku offers strong growth potential but requires careful consideration of market dynamics. For those seeking exposure in the streaming industry, Roku could be a smart choice.
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To truly know if Roku is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
If you found this stock review interesting, you may also like this review on AMD.
The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.