Down 86%, Is It Time to Buy the Dip on This Growth Stock?

Company Overview - Roku's stock has significantly declined, trading 86% below its all-time high reached in July 2021, despite a remarkable 530% increase from its March 2020 low [1] - The company has added 2 million active accounts in Q2, bringing the total to 83.6 million, indicating continued user growth [3] Financial Performance - Roku reported a 14% revenue gain in the latest quarter, with management forecasting an 11% rise in the third quarter, suggesting healthy business expansion [2] - The company has achieved positive-adjusted EBITDA for four consecutive quarters, although it is not yet generating positive net income [7][8] Market Position - Roku holds a top market share among smart-TV operating systems in the U.S., Canada, and Mexico, benefiting from high user engagement with 30.1 billion hours of content streamed in the last three months [3] - The company operates as an agnostic platform, allowing it to capitalize on the cord-cutting trend without incurring high content licensing costs [4] Industry Trends - The digital-ad industry is cyclical, with marketing budgets tightening during economic downturns, as seen in 2022 and 2023; however, long-term trends indicate that ad dollars will increasingly flow to streaming services [5] - Roku's reliance on major content companies for ad inventory poses a risk, as these companies hold significant negotiating power [9] Valuation - Roku's current price-to-sales ratio stands at 2.6, well below its historical average of 9.5, making the stock potentially attractive for investors looking to buy the dip [10]