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When Will Roku, Inc. (NASDAQ:ROKU) Breakeven?

Simply Wall St

Roku, Inc.'s (NASDAQ:ROKU): Roku, Inc. operates a TV streaming platform. The company’s loss has recently broadened since it announced a -US$8.9m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$37.4m, moving it further away from breakeven. As path to profitability is the topic on ROKU’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for ROKU.

View our latest analysis for Roku

ROKU is bordering on breakeven, according to the 16 Entertainment analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$31m in 2021. ROKU is therefore projected to breakeven around 2 years from now. How fast will ROKU have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, ROKU may become profitable much later than analysts predict.

NasdaqGS:ROKU Past and Future Earnings, November 12th 2019

Given this is a high-level overview, I won’t go into details of ROKU’s upcoming projects, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. ROKU currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. ROKU currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on ROKU, so if you are interested in understanding the company at a deeper level, take a look at ROKU’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:

  1. Valuation: What is ROKU worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ROKU is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Roku’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.