Roku Stock Surges on Netflix–Warner Bros Deal: Is ROKU a Buy After the December 5 Rally?

Roku, Inc. (NASDAQ: ROKU) finished trading on Friday, December 5, 2025 at about $100.09 per share, up roughly 5.9% on the day and near the top of its intraday range around $93–$101. ^[1]

The move came as investors cheered Netflix’s roughly $83 billion acquisition of Warner Bros. Discovery’s studio and streaming business, a mega‑deal that many see as bullish for “neutral” streaming platforms like Roku that aggregate content from competing services. Roku shares closed Friday up nearly 5.9%, with commentators highlighting its role as the operating system layer benefiting from intensified streaming competition. ^[2]

After a year of strong gains but lingering volatility, the key question for investors is whether Roku stock still has room to run after the December 5 rally. Here’s a deep dive into the latest news, forecasts, and analysis as of December 5, 2025.

Roku stock today: price action and performance

Roku’s latest close around $100 leaves the stock:

Up roughly 25–30% year to date in 2025, depending on the exact measurement date, outpacing major U.S. indexes. ^[3]
Still below its 52‑week high near $108.63, reached in November 2025. ^[4]
Roughly flat over a longer stretch: one analysis notes that $1,000 invested five years ago would be worth only about $323 today, reflecting how far the stock is still down from its 2021 peak. ^[5]

From a technical and valuation standpoint, MarketBeat data shows Roku:

Trading with a 50‑day moving average around the high‑$90s and a 200‑day average around the low‑$90s, putting the current price slightly above both short‑ and long‑term trend lines. ^[6]
Carrying a negative price‑to‑earnings ratio (around ‑470x) because full‑year GAAP earnings are still slightly negative, despite recent positive quarters. ^[7]

In other words: Roku has bounced sharply in 2025, regained momentum into year‑end, but remains a volatile turnaround story rather than a fully de‑risked compounder.

Fundamental momentum: Q3 2025 earnings turn the corner

The underlying driver behind renewed optimism is Roku’s third‑quarter 2025 performance, which marked a pivotal turn back to profitability:

Total Q3 2025 revenue: about $1.21 billion, up 14% year over year. ^[8]
Platform revenue: roughly $1.06 billion, up 17% YoY, powered by advertising and subscription revenues. ^[9]
Devices revenue: about $146 million, down around 5% YoY, illustrating the ongoing shift away from low‑margin hardware toward the higher‑margin platform business. ^[10]

Profitability metrics improved sharply:

Roku reported earnings per share of $0.16 in Q3, beating consensus expectations of around $0.07. ^[11]
Operating income turned positive, at roughly $9.5 million, the company’s first quarter of positive operating income since 2021. ^[12]
Net income swung to a small profit of about $24.8 million, versus a net loss in the same quarter a year earlier. ^[13]

Roku also emphasized a much stronger balance sheet and cash‑flow profile:

About $2.3 billion in cash and short‑term investments on the balance sheet.
Trailing 12‑month free cash flow above $440 million.
A full‑year 2025 adjusted EBITDA margin expected around 8.4%, with Q4 adjusted EBITDA guided to approximately $145 million, which would be a record. ^[14]

Operationally, engagement remains robust:

Total streaming hours on Roku’s platform climbed roughly 12% to 36.5 billion hours in Q3. ^[15]

These results have reinforced the view that Roku is no longer just a “growth at any cost” story. Management is proving it can grow revenue, invest in ad‑tech, and still generate positive operating income and cash flow.

The platform & ad business: Roku’s real growth engine

While Roku still sells streaming devices and licenses its operating system to TV manufacturers, the platform business is the core of the investment thesis.

Recent data points highlight Roku’s scale and competitive positioning:

Roku serves over 90 million streaming households globally and operates The Roku Channel, which reaches about 145 million viewers in the U.S. ^[16]
The Roku Channel remains a leading free ad‑supported streaming TV (FAST) service, capturing around 6.2% of U.S. TV streaming time and ranking #3 globally by reach. ^[17]
Roku’s average revenue per user (ARPU) stands near $41–42, up about 4% year over year, with management and independent analysts pointing to a long‑term ARPU target in the mid‑$40s as monetization deepens. ^[18]

On the advertising and ad‑tech side:

Roku is positioned as a neutral, data‑rich connected‑TV (CTV) platform in a global CTV ad market expected to exceed $50 billion by the mid‑2020s. ^[19]
Partnerships with major demand‑side platforms (DSPs), including Amazon’s advertising business and The Trade Desk, are helping Roku improve targeting precision and fill rates. ^[20]
Management has pointed to sports streaming as a major engagement and ad driver, noting that every NFL game is now available via streaming and that Roku’s “Sports Zone” is designed to simplify fragmented sports rights across apps. ^[21]

Taken together, recent commentary from analytics providers and research firms frames Roku as an ad‑platform first, hardware second company — something that is critical when assessing valuation and long‑term potential. ^[22]

Why Roku popped on December 5, 2025

1. Netflix–Warner Bros. Discovery mega‑deal boosts the “aggregator” thesis

On December 5, Netflix announced an $82–83 billion deal to acquire Warner Bros. Discovery’s studio and streaming operations, consolidating major franchises like DC Comics and Harry Potter under a single streaming giant. ^[23]

Benzinga and Barron’s both linked Roku’s nearly 6% rally to this merger:

The logic is that as content giants merge, competition shifts to the TV operating system layer—where Roku is a leading neutral platform.
A larger, content‑rich Netflix could drive more engagement through Roku’s interface, which in turn supports higher ad impressions and better monetization for Roku’s platform business. ^[24]

In short, the market seemed to treat Roku as a “picks and shovels” beneficiary of streaming consolidation rather than a direct participant in the risky world of big, leveraged media mergers.

2. Fresh analyst and quant upgrades

Several new or updated forecasts around December 5 have also supported sentiment:

Guggenheim raised its Roku price target from $110 to $115 and maintained a Strong Buy rating.
Citizens reiterated a Buy/“Market Outperform” rating with a $145 target.
Piper Sandler upgraded Roku from Hold to Buy on November 3 and lifted its target from $88 to $135.
UBS maintains a Neutral rating but nudged its target to $103. ^[25]

Across 19–30 covering analysts (depending on source), Roku now carries:

A consensus rating of “Buy” or “Moderate Buy.”
An average 12‑month price target around $111–114, implying roughly 11–15% upside from the $100 region. ^[26]

Zacks’ latest “Analyst Blog” on December 5 went further, placing Roku among four consumer discretionary stocks to buy on rising hopes for another Federal Reserve rate cut in December. The firm notes that:

Roku’s earnings estimate for the current year has improved about 83% over the last 60 days, with expected earnings growth above 100%.
The stock currently carries a Zacks Rank #2 (Buy). ^[27]

3. A wave of valuation‑driven analyses

Several December 5 pieces dug into Roku’s valuation:

Simply Wall St published a detailed discounted cash flow (DCF) analysis concluding Roku’s intrinsic value is about $155.27 per share, using a two‑stage free‑cash‑flow‑to‑equity model that projects FCF rising from roughly $395 million to $1.31 billion by 2029. At a share price near $94–100, they estimate Roku is trading at about a 39% discount to fair value. ^[28]
The same analysis, however, notes Roku’s Price‑to‑Sales ratio of ~3.1x is above its bespoke “fair” multiple of 2.41x and above the broader entertainment industry average (~1.5x), even if it remains below higher‑growth peers. ^[29]

In other words, Roku looks cheap on long‑term cash‑flow models but somewhat rich on simple sales multiples, which helps explain why different analysts land on very different fair‑value estimates.

Updated forecasts: what Wall Street expects from Roku

Looking across major forecast aggregators as of December 5:

StockAnalysis reports that 19 analysts covering Roku have a “Buy” consensus and an average price target around $111.63, implying about 11.5% upside over the next 12 months. The range runs from $95 (low) to $145 (high). ^[30]
Those models call for Roku’s revenue to grow from about $4.11 billion in 2024 to $4.79 billion in 2025 (+16%) and $5.41 billion in 2026 (+13%), with EPS improving from roughly ‑$0.89 in 2024 to +$0.33 in 2025 and +$1.22 in 2026. ^[31]
MarketWatch shows a broader sample of 32 analysts with an average recommendation of “Overweight” and an average price target around $113–114, broadly consistent with other data services. ^[32]

Separately, a recent analysis from The Motley Fool (via Nasdaq) noted that Roku:

Is trading roughly 32% higher year to date in 2025, about double the broader market.
Still fell in three of the prior four years and remains far below its 2021 highs, underscoring its “boom‑bust” history. ^[33]

Overall, the Street view is that Roku is back on a profitable growth trajectory, but consensus upside from current levels is moderate rather than explosive, unless you believe more aggressive DCF scenarios.

Ownership and risk: insider selling and hedge‑fund moves

One development that may give some investors pause is a string of insider sales and institutional position changes highlighted on December 5:

Hedge fund Marshall Wace LLP cut its Roku stake by 16.1% in Q2, selling about 342,000 shares and ending the period with 1.79 million shares (around 1.21% of the company), valued near $157 million. ^[34]
Over the last 90 days, Roku insiders — including CEO Anthony Wood and other executives — have sold roughly 491,000 shares worth about $51.5 million, although insiders still own nearly 14% of the company. ^[35]
Institutional investors and hedge funds collectively own about 86% of Roku’s float, indicating the shareholder base is heavily professional and potentially more sensitive to short‑term fundamentals and guidance. ^[36]

MarketBeat’s December 5 “Trading 1.7% Higher – Time to Buy?” note underscores the mixed picture:

Roku’s EPS beat and solid revenue growth are positives.
But the company still shows a slightly negative net margin on a full‑year basis, and valuation remains elevated compared with many traditional media and consumer‑tech peers. ^[37]

None of this automatically implies a bearish outlook, but it does highlight that Roku is still a higher‑risk, higher‑beta name that institutions actively trade rather than a sleepy dividend stock.

Holiday quarter and near‑term catalysts to watch

The crucial holiday season

An InvestorsObserver report on December 3 called out Roku’s entrance into the holiday shopping season after a roughly 30% year‑to‑date rally as a key near‑term test:

Q4 is historically Roku’s strongest period for new account activations, as people plug in newly gifted devices and Roku TVs.
Management has described Christmas Day as its single biggest day of new account creation each year, with streaming hours per account jumping by nearly three hours in the week after Christmas. ^[38]

For Q4 2025, Roku is guiding to:

Revenue of about $1.35 billion, up from $1.21 billion in Q3.
Net income around $40 million, signaling continued profitability into the holiday quarter. ^[39]

If Roku hits or beats that guidance while keeping costs in check, it would further validate the view that the company has structurally shifted back to profitable growth.

Investor relations event: Nasdaq conference

On December 10, 2025, Roku’s CFO and COO Dan Jedda is scheduled to speak at the 53rd Annual Nasdaq Investor Conference in London in a fireside chat at 1:00 p.m. GMT. The event will be webcast on Roku’s investor relations site. ^[40]

Investors will be listening for:

Updates on ARPU trends and ad‑demand momentum into 2026.
Color on the Netflix–WBD deal and how Roku views consolidation among content owners.
Any changes in capital allocation, including potential acceleration of share buybacks (Roku repurchased about $50 million of stock in Q3 under a $400 million plan). ^[41]

The bull case for Roku after December 5

Supporters of the stock point to several key arguments:

Platform scale and engagement
Roku’s large and growing base of active accounts and streaming hours gives it a meaningful data advantage and a strong position in the ad‑supported streaming ecosystem. ^[42]
Advertising growth outpacing the broader market
Research pieces from Barchart and others note that Roku’s platform revenues and ad‑sales growth have been outpacing overall CTV ad growth, supported by improved tools for advertisers and a shift toward performance‑based campaigns. ^[43]
Return to profitability and strong cash flow
The combination of positive operating income, hundreds of millions in free cash flow, and a cash‑rich balance sheet gives Roku flexibility to keep investing in software, ad‑tech, and international expansion without tapping equity markets. ^[44]
Attractive long‑term valuation, if growth holds
Under more optimistic DCF scenarios, Roku could be significantly undervalued, with fair‑value estimates clustered in the $130–$155+ range, well above current levels. ^[45]
Beneficiary of streaming consolidation
As the Netflix–WBD deal illustrates, content giants may consolidate to manage costs and compete globally. Platforms like Roku, which sit between consumers and apps, potentially gain from this by remaining agnostic infrastructure that all content providers need. ^[46]

The bear case: what could go wrong

Skeptics flag several areas of concern:

Fierce competition
Roku competes with Amazon Fire TV, Google TV/Android TV, Samsung’s Tizen OS, and others. These rivals also have deep pockets, integrated hardware, and their own ad ambitions, which could cap Roku’s pricing power and market share over time. ^[47]
Ad‑market cyclicality
Roku’s fortunes are tied closely to the health of the advertising market. Any downturn in ad budgets, especially in key categories like media and consumer goods, can quickly pressure platform revenue growth.
Negative GAAP margins and high valuation on simple multiples
Even after the Q3 beat, Roku still has slightly negative net margins on a full‑year basis, and its Price‑to‑Sales ratio above 3x is rich compared with many traditional media and hardware names, even if it’s below some high‑growth tech peers. ^[48]
Insider and hedge‑fund selling
Significant insider sales and the Marshall Wace stake reduction can be interpreted as signals that at least some sophisticated holders view the risk/reward as less compelling after the recent rally, even if such moves are not definitive bearish indicators on their own. ^[49]
Share‑price volatility
With a beta near 2.0, Roku tends to move about twice as much as the overall market, up or down. ^[50]

So is Roku stock a buy after the December 5 spike?

As of December 5, 2025, the consensus picture on Roku looks like this:

The business is clearly improving: revenue growth in the mid‑teens, platform revenue up high‑teens, positive operating income, strong cash flow, and a credible path to higher margins. ^[51]
Wall Street is broadly bullish but not euphoric, with a Buy/Moderate Buy rating and average targets offering low‑double‑digit upside from current prices. ^[52]
Independent valuation work ranges from moderately undervalued (on DCF) to somewhat expensive (on pure sales multiples), depending on your growth and margin assumptions. ^[53]

For investors who:

Believe connected‑TV advertising will keep taking share,
Think Roku can maintain or grow its position as a leading neutral OS and FAST platform, and
Are comfortable with volatility and a still‑evolving profit profile,

Roku may still look like an attractive growth‑oriented play, even after the December 5 rally.

For more conservative or income‑focused investors, the combination of high volatility, mixed profitability history, insider selling, and valuation uncertainty may justify a more cautious, “watch‑list, not core holding” stance.

Either way, the holiday quarter results, the December 10 Nasdaq conference appearance, and updated 2026 guidance are likely to be the next big catalysts for Roku’s share price.