Prosper Junior Bakiny, The Motley Fool

Sat, Jun 7, 2025, 3:32 PM5 min read

• Roku leads the connected TV market, benefits from a network effect, and still has significant growth avenues.

• MercadoLibre should win in the long run as e-commerce and fintech continue to gain widespread adoption.

• 10 stocks we like better than Roku ›

Those concerned about recent market volatility can take comfort in the fact that equity markets will likely deliver competitive returns over the next decade. Selling shares of top companies now may result in lower stock market gains than investors might have otherwise earned over the long term if they had held on. The better strategy is to stick to your holdings and be on the lookout for companies that can perform well, perhaps even better, than the market given enough time. Two stocks that might have what it takes are Roku (NASDAQ: ROKU) and MercadoLibre (NASDAQ: MELI). Here's more on these potential market beaters.

Although Roku started 2025 strong, its shares have been in free fall for the past few weeks, partly due to somewhat disappointing financial results and guidance. Potential tariff-related headwinds are also not helping. Despite these concerns, the company's financial results remain strong, and its ecosystem continues to grow and strengthen. In the first quarter, Roku's revenue increased by 16% year over year to $1 billion. Streaming hours were 35.8 billion, 5.1 billion more than in the comparable period of the previous fiscal year.

As more people spend more time on Roku's platform, the company's ecosystem becomes more valuable to advertisers, a classic example of the network effect. During the first period, Roku's platform revenue, which includes ad-related sales, increased by 17% year over year, compared to 11% year-over-year growth for its device segment, where it reports sales of its namesake streaming devices. Roku remains unprofitable, but it also made some progress on this front in the quarter, reporting a net loss per share of $0.19, which is better than the $0.35 reported in Q1 2024.

Roku could feel some volatility in the near term, and the impact of tariffs remains somewhat uncertain. However, Roku has sold its devices at a loss before when faced with the choice. The company prioritizes deepening engagement within its ecosystem -- that's where the long-term opportunity lies. So, if tariffs lead to higher manufacturing costs for its devices, Roku will likely adopt the same strategy as before.

Meanwhile, television viewing time is expected to continue shifting away from cable and toward streaming in the long run. And whichever giant in the industry wins the race makes little difference to Roku, which grants its users access to most of the big players in the streaming market. Advertising dollars will follow viewers wherever they go, providing Roku with plenty of revenue growth opportunities.