Roku Is a Streaming Leader, but We're Concerned It Won't Create Shareholder Value Without a Moat

Roku provides the most-used streaming operating system in the US through the streaming devices and televisions that it manufactures or licenses its name and software to. Roku’s strategy is to remain a leading provider of streaming devices by maintaining low prices and accepting losses in its devices segment. It intends to then drive profits from Roku user accounts. We are skeptical that this is a viable strategy, because we don’t see competitive advantages that are likely to turn the firm toward sufficient profit after a history of generating losses.