Roku, Inc. (NASDAQ:ROKU) Is Expected To Breakeven

Roku, Inc. (NASDAQ:ROKU) Is Expected To Breakeven

Roku, Inc.'s (NASDAQ:ROKU): Roku, Inc. operates a TV streaming platform. The company’s loss has recently broadened since it announced a -US$8.9m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$37.4m, moving it further away from breakeven. As path to profitability is the topic on ROKU’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ROKU’s growth and when analysts expect the company to become profitable. 

View our latest analysis for Roku 

Consensus from the 16 Entertainment analysts is ROKU is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$31m in 2021. Therefore, ROKU is expected to breakeven roughly 2 years from now. How fast will ROKU have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected. 

I’m not going to go through company-specific developments for ROKU given that this is a high-level summary, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period. 

One thing I’d like to point out is that ROKU has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. ROKU currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment. 

Next Steps:

There are key fundamentals of ROKU which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ROKU, take a look at ROKU’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine: 

Valuation: What is ROKU worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ROKU is currently mispriced by the market.

Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Roku’s board and the CEO’s back ground.

Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here. 

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at [e-mail]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.