Roku Shares Climb. Is It Too Late to Buy the Stock?

Why It Matters

The results highlight Roku’s transition to a profitable platform business, but high stock‑based compensation raises valuation concerns for investors.

Key Takeaways

• Q4 revenue up 16% to $1.39 billion.
• Platform segment grew 18%, driving profit.
• Adjusted EBITDA doubled to $169.4 million.
• Stock‑based compensation cost $85 million this quarter.
• EV/EBITDA ~18×, valuation pressured by SBC.

Pulse Analysis

Roku’s fourth‑quarter performance underscores the growing importance of its platform segment, which now accounts for the bulk of revenue and profitability. While device sales remain a modest loss leader, the platform’s 18% year‑over‑year growth was powered by higher video‑advertising spend and the launch of premium subscription bundles, including HBO Max. This shift mirrors broader industry trends where streaming services monetize audiences through ad‑tech and subscription tiers rather than hardware sales, positioning Roku as a key distribution hub.

From a valuation standpoint, Roku trades at roughly an 18‑times EV/EBITDA multiple based on 2026 estimates, a level that could be justified by its expanding margins. However, the company’s $85 million stock‑based compensation expense—more than half of its adjusted EBITDA—raises red flags for analysts, especially amid a broader SaaS sell‑off where investors scrutinize non‑cash expense transparency. The market’s reaction reflects a cautious optimism: investors appreciate the earnings beat but remain wary of dilution and the sustainability of current profit metrics.

Looking ahead, Roku projects 2026 revenue of $5.5 billion and plans to roll out premium subscription bundles later this year, aiming to deepen user engagement and boost average revenue per user. The firm’s AI initiatives, targeting content personalization and ad targeting, could further enhance margins and reduce production costs. Nonetheless, prospective buyers must weigh the upside of a growing platform against the ongoing SBC burden and the potential for valuation compression if earnings growth stalls.

Roku Shares Climb. Is It Too Late to Buy the Stock?

Geoffrey Seiler, The Motley Fool · Tue, February 17 2026 at 12:05 PM EST

Roku (NASDAQ: ROKU) shares surged after the streaming company reported strong Q4 results and issued upbeat guidance. Let’s take a closer look at its results and prospects to see whether it’s too late to buy the stock.

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A strong quarter and upped guidance

While Roku is best known for its streaming devices, the company’s primary business is advertising and streamlining distribution (its platform segment); the device segment functions more as a loss leader.

For Q4, Roku’s revenue jumped 16 % year‑over‑year to $1.39 billion, and earnings per share (EPS) came in at $0.53, compared with a loss of $0.24 a year ago. That topped analyst expectations for a profit of $0.28 per share on $1.35 billion in revenue.

• Platform revenue climbed 18 % to $1.22 billion. Growth was led by video advertising and premium subscriptions. Roku said it was its best quarter ever for premium subscriptions, helped by the addition of HBO Max. The company plans to start offering premium subscription bundles later this year to help maintain momentum.

• Device revenue edged up 3 % to $170.9 million, while device gross profits were a loss of $33.9 million.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than doubled year‑over‑year to $169.4 million, above its $145 million guidance. Notably, Roku’s adjusted EBITDA excludes stock‑based compensation (SBC), which totaled $85 million in the quarter. Stock compensation is often excluded from adjusted EBITDA because it is a non‑cash expense, but it is a real expense that dilutes shareholders and is used to compensate employees instead of cash.

Q4 Results Summary

| Segment | Revenue | Revenue Growth (YoY) | Gross Profit | Gross Margin |

|---------|---------|----------------------|--------------|--------------|

| Platform | $1.22 billion | 18 % | $646.7 million | 52.8 % |

| Device | $170.9 million | 3 % | ($39.9 million) | (23.3 %) |

| Total| $1.39 billion | 16 % | $606.8 million | 43.5 % |

Data source: Roku Quarterly Report.

Looking ahead, Roku projected 2026 revenue of around $5.5 billion, with platform revenue increasing by 18 % to $4.89 billion. It expects adjusted EBITDA of roughly $635 million and net income of $325 million.

For Q1, the company guided revenue of $1.2 billion (an 18 % YoY increase), adjusted EBITDA of $130 million, and net income of $50 million, with platform revenue expected to climb by 21 %.

The company is bullish on artificial intelligence (AI), saying it will lower content‑creation costs and increase engagement. Roku is also using AI to personalize content, automate workflows, and improve ad targeting.

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Is it too late to buy the stock?

From a valuation perspective, Roku trades at an enterprise‑value‑to‑EBITDA multiple of about 18 × 2026 analyst estimates. That would be reasonable if stock‑based compensation weren’t eating away more than half of its adjusted EBITDA. However, SBC has come more into focus during the software‑as‑a‑service (SaaS) sell‑off, and Roku has an SBC problem. As such, I wouldn’t chase this rally.

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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roku. The Motley Fool’s disclosure policy is available on its website.