Down 84%, Should You Buy Roku While It's Below $90?

Core Viewpoint - Roku is positioned as a leading player in the smart-TV operating system market, with significant market share in North America and a focus on improving its financial performance through cost-cutting measures [1][2][5]. Financial Performance - Roku reported operating losses of $531 million in 2022 and $792 million in 2023, but has made strides in reducing these losses, with a decrease from $350 million in Q3 2023 to $36 million in the last quarter due to lower research and development and sales and marketing costs [2]. - The company's shares have increased by 52% since early August, outperforming broader market indices despite mixed financial results in the second and third quarters [5]. Market Position and Growth Potential - Roku operates in two expanding markets: streaming entertainment and digital advertising, benefiting from the trend of households canceling cable subscriptions and increasing engagement on streaming platforms [3]. - In Q3, Roku reported that 32 billion hours of content were streamed on its platform, representing a 20% year-over-year increase, highlighting its strong user engagement [6]. Competitive Landscape - Roku faces intense competition from major players like Apple, Alphabet, and Amazon, which have their own streaming services and platforms [4]. - Despite the competition, Roku's dominant position in North America and its attractive valuation, with a price-to-sales ratio of 2.9, make it a compelling investment opportunity [9]. Financial Health - As of September 30, Roku had a clean balance sheet with $2.1 billion in cash and cash equivalents and no debt, which positions the company favorably despite its unprofitable status [10].