What will Roku's stock price look like in 3 years?

The recent stock market rally has not been good for all businesses. Take a look. Roku (NASDAQ resonance code: ROKU)as soon as Got it! The stock price is down 32% in 2024 (as of April 3) alone. In 2024 alone (as of April 3), its stock price is down 32%.

Zooming in, the situation is the same. exist For the past three years (math.) genusThis one. Share price of Liquidator stock It's down 81%. the corresponding time period (in a different year etc)Nasdaq Resonance Index This is very disappointing compared to the increase in 21%. The

Now that Roku continues to face extreme investor pessimism, is it time to buy the stock? Will the stock deliver big gains for shareholders over the next three years? Let's take a closer look.

Keep an eye on these indicators

Despite the poor stock price performance, Roku's business is much stronger than it was three years ago. Investors can see this in a number of key industry indicators.

At the end of 2023, Roku had 80 million active accounts, up 56% from 51.2 million at the end of 2020. That's up 56% from 51.2 million at the end of 2020, and the company has done a great job of attracting more users even after the broader streaming media industry has been hit.

Engagement is also very high. In the past 12 months, 106 billion hours of content were streamed on the Roku platform. That's up 81% from three years ago.

because of Slowdown in the digital advertising industry(math.) genusin order to Average income per household (ARPU)Monetization of measurement exist The last few quarters have been hit. However, the ARPU for 2023 is $39.92, which is significantly better than 2020. In other words, Roku is doing a great job of generating more revenue from its user base. This is certainly an encouraging sign.

As we look ahead to the next three years, I think it's likely that these indicators will continue to move in the right direction. That's because Roku is the top smartphone operating system in North America, and that position shouldn't change.

In addition, there is still much room for streaming television to continue to take time away from traditional broadcast and cable sources. According to Nielsen, in February, 62.2% of daily U.S. TV airtime was not captured through streaming. As the major streaming services gain access to more sports broadcasts in the future, this could prompt stubborn households to cut the cord. In fact, in the U.S., the number of households that have dropped their old cable subscriptions now exceeds the number of households that still have cable subscriptions.

Roku will continue to benefit from more convenience, more choices, and better pricing that will continue to attract viewers.

Market Demand

While Roku will continue to grow over the next few years, I believe investors will be watching closely the company's ability to achieve sustainable profitability. So far, that has not been the case, with a total net loss of $710 million in 2023.

Therefore, we hope that as Roku expands, the number of subscribers increases, revenues increase, and we will eventually realize positive annual earnings. It's worth noting that Koon expects the company to last year(used form a nominal expression)adjustments Amortization of post-interest tax depreciationsell front profit(EBITDA))will be positive The

In times of low interest rates, it may not be a problem for investors to hold stock in a company that often loses money, but that may not be the case in the coming years. In this tighter monetary environment, Roku's shareholders may demand that the company become more fiscally responsible. From that perspective, I think there's a good chance the stock could make investors a lot of money if it produces positive net income.

Currently, the company's stock trades at a price-to-sales ratio (P/S) of 2.5, which is roughly one-third of its average valuation over the past three years. If Roku grows significantly in all three of these key metrics (active accounts, streaming hours, and ARPU) and generates profits by 2027, the stock could be a big winner as the P/S expands.

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Neil Patel does not own any of the stocks mentioned above.The Motley Fool holds a recommendation for Roku.The Motley Fool has a disclosure policy.

Where Will Roku Stock Be in Three Years? This post was originally published by The Motley Fool.