Ricardo Pillai
3 min read
We came across a bullish thesis on Roku, Inc. (ROKU) on The Finance Corner’s Substack by Kostadin Ristovski. In this article, we will summarize the bulls’ thesis on ROKU. Roku, Inc. (ROKU)'s share was trading at $74.6 as of 5th June.
Close up of a hand holding a tablet device with video services streaming.
Roku, much like the classic razor-and-blades model, has positioned itself as a hardware gateway to a highly monetizable software ecosystem. Initially launched in 2008 to support Netflix, Roku began with low-cost streaming devices, eventually expanding into a broad lineup of physical products—from smart TVs and speakers to home accessories—sold at a loss to attract users. The real value lies in the Roku OS, which it licenses freely to TV manufacturers like TCL and Hisense, enabling Roku to grow its user base without owning hardware production.
This feeds into its true moneymaker: the platform business. The Roku Channel, launched in 2017, now features over 80,000 titles and more than 500 live channels, all of which are ad-supported. The company also earns by taking cuts from streaming subscriptions and charging content providers for distribution and prominence. Unlike content-heavy rivals, Roku remains content-agnostic, focusing on being the go-to aggregator and ad platform in the streaming value chain.
Strategic acquisitions in data analytics, content, and ad tech have strengthened this positioning. While Roku isn't profitable yet due to the drag from its hardware division and rapid pandemic-era expansion, its platform gross margin stands at 54%, and the company holds $1.7B in net cash. International growth, ad innovation (including shoppable ads via Walmart), and potential new verticals, such as gaming, suggest that revenue can continue to grow at a rate of nearly 10% annually.
Despite trading near its estimated fair value, Roku presents a compelling case due to operating leverage, potential margin expansion, and even acquisition interest. Investors face dilution risks and limited governance, but the long-term digital ad tailwinds remain highly attractive.
Previously, we covered a bullish thesis on Roku by LongYield in May 2025, which aligns with Kostadin Ristovski’s June 2025 view. The stock has since then appreciated by approximately 23%. Both highlight Roku’s high-margin platform business and ad monetization strength. LongYield focuses on improving financials, guidance, and recent acquisitions, while Ristovski emphasizes Roku’s razor-and-blades model, OS distribution, and long-term operating leverage. The theses reinforce each other but differ in focus—one near-term execution, the other strategic positioning.
