TLDR
- Roku stock jumped 8.6% Friday after Q4 earnings beat with EPS of $0.53 versus $0.28 expected and revenue hitting $1.39 billion
- Company raised 2026 revenue outlook citing ad market recovery and record premium subscription growth in Q4
- New monetization plans include streaming bundles, expanded $3 “Howdy” service, and deeper Amazon and HBO Max partnerships
- Analysts upgraded ratings with average price target reaching $123.85, led by Rosenblatt upgrade to Buy and Wells Fargo $137 target
- CEO sold 50,000 shares worth $4.54 million as part of broader insider selling totaling $24.2 million
Roku shares surged 8.6% Friday, closing at $90.06 after delivering fourth-quarter results that crushed Wall Street estimates. The streaming platform posted earnings per share of $0.53, beating the $0.28 consensus by $0.25.
Revenue reached $1.39 billion for the quarter, topping analyst expectations of $1.35 billion. That represented a 16.1% increase compared to the same period last year.
Trading volume exploded to 14.4 million shares, up 274% from the typical daily average of 3.9 million. The stock peaked at $96.55 during Friday’s session.
Management Raises Revenue Outlook
The company lifted its full-year 2026 revenue guidance above Street projections. Management pointed to a recovering advertising market as the primary driver behind the stronger forecast.
Roku reported record premium subscription additions during the fourth quarter. Platform revenue, which carries higher profit margins, helped drive gross margin expansion.
The company still operates with a negative net margin of 0.61% and negative return on equity of 1.08%. Roku’s market cap stands at $13.31 billion with a beta of 1.99.
New Monetization Strategies Unveiled
Roku announced several initiatives designed to boost revenue per user. The company plans to launch premium subscription bundles across its platform in the coming months.
Management will expand its $3 “Howdy” service to additional platforms. Roku is also strengthening partnerships with major streaming services like HBO Max and Amazon to enhance integration and monetization opportunities.
The moves come as Roku controls half of all streaming on U.S. televisions. The company’s balance sheet holds $2.3 billion in cash and investments with zero debt.
Analysts Turn More Bullish
Rosenblatt analyst Barton Crockett upgraded Roku to Buy from Hold with a price target increase to $118 from $106. He called the company’s guidance “beatable again” and considers the stock undervalued at its current EV/EBITDA multiple of 16x.
Crockett highlighted projected EBITDA growth of 46% compound annual growth rate from 2025 to 2027. Free cash flow currently exceeds EBITDA, supporting his bullish thesis.
JPMorgan analyst Cory Carpenter maintained Roku as a Top Pick for 2026. He kept his Buy rating with a $125 price target, noting that platform revenue growth outlook of 18% for 2026 exceeded the Street’s 15% estimate.
Carpenter sees potential for over 20% platform revenue growth this year. Tailwinds include the Amazon DSP deal and major events like U.S. midterms, World Cup, and Winter Olympics.
Wells Fargo raised its target to $137 with an overweight rating. Morgan Stanley set a $135 target, while Needham reaffirmed its $110 buy rating.
The consensus rating stands at Moderate Buy. Among 30 analysts, one rates it Strong Buy, 25 rate it Buy, three have Hold ratings, and one has a Sell rating. The average price target of $123.85 suggests 37.5% upside.
CEO Anthony Wood sold 50,000 shares at $96.48 for $4.54 million on February 2. CFO Dan Jedda sold 3,000 shares at $107.56 for $322,680 on January 15. Insiders sold 234,790 shares worth $24.2 million total in the last quarter.
Institutional investors own 86.30% of Roku stock. Vanguard Group increased its stake by 2.5% to 13 million shares worth $1.3 billion. Acadian Asset Management lifted holdings by 41.2% during Q2.
