Roku (ROKU): A Bull Case Theory

Ricardo Pillai

Mon, Jul 14, 2025, 12:39 PM 3 min read

We came across a bullish thesis on Roku on Blind Squirrel's Substack. As of 9ᵗʰ July, Roku's share was trading at $88.14. ROKU's forward P/E was -139.90 according to Yahoo Finance.

A person at home displaying a vibrant media streaming interface, being rendered on a large flatscreen television.

Roku is a leading TV operating system provider that aims to become the streaming platform that connects the entire TV ecosystem. The company is poised to benefit from a multidecade shift towards streaming TV. Roku's business model consists of two revenue sources: platform (software) and player (hardware). The platform revenue is generated from the sale of digital advertising and related services on the Roku operating system, as well as license revenues. Roku's platform, The Roku Channel (TRC), aggregates a plethora of content across many categories and is monetized with advertising.

Roku's competitive advantage currently lies in having a better user experience, with a simple and easy-to-use interface and cheap hardware/software offerings. However, these are weak 'moats' and Roku's future will be powered by global network effects, powered by its Roku channel. The company has a purpose-built OS, and its sole focus is winning CTV. Google and Amazon have achieved meaningful scale, but Roku has higher streaming hours per user than any other platform. The CTV ecosystem is in its early innings, and OEMs with no technological background and inferior OS have achieved meaningful traction in the market.

Roku's growth strategy has three main pillars: grow active accounts, grow monetizable hours, and grow ARPU. The company faces stiff competition from Google and media consolidation, but its management team has proven everyone wrong and will likely keep executing over the next years. Publisher adoption and relative scale vs competing operating systems and SVOD services will go hand in hand and will dictate Roku's success over the next decade. Roku's long-term revenue relies upon the percentage of inventory that the platform is able to monetize in the future and the number of households reached.

Previously, we covered a bullish thesis on Roku by Blind Squirrel on June 25, highlighting its leading TV operating system, competitive advantage in user experience, and growth strategy. The stock has appreciated, but the thesis emphasized Roku's potential in the multidecade shift towards streaming TV. Kostadin Ristovski's thesis, however, focuses on a different company, suggesting it as a backdoor play on AI energy needs, citing its critical energy infrastructure assets and potential to profit from the AI energy spike. The two theses share a similar bullish view but emphasize different aspects, with Ristovski's thesis being more contrarian and focused on energy infrastructure.