Shares of Roku (ROKU 1.34%) stock climbed 11% in January according to data provided by S&P Global Market Intelligence. There was no big news during the month, but investors are feeling more confident about the economy since President Donald Trump took office, and Netflix's excellent quarter might have the market feeling good about Roku, too.

What's wrong with Roku stock?

There doesn't seem to be anything wrong with Roku, except that it's still fighting its way toward profits. Whenever a company gets big and still can't turn a profit, that could be worrisome. But there are indications that Roku still has plenty of growth potential, and it's moving toward positive net income.

Roku continues to report double-digit revenue growth on a fairly consistent basis. It was up 16% year over year in the 2024 third quarter. It has two segments: device and platform. Shoppers know it for its devices, which are the infrastructure that gets users into its ecosystem. It has the top operating system in the U.S., Canada, and Mexico, and when users buy a device, they create an account to access their streaming subscriptions. The platform segment is the much larger one, accounting for 85% of total sales in the third quarter. It's mostly ad revenue from its free, ad-supported channels, and also other third-party fee revenue from subscriptions signed up through Roku's platform and similar arrangements. The device segment is a money-loser right now, but it's the gateway to the larger business; platform gross profit increased 30% year over year in the third quarter, and so did total gross profit.

The third quarter was the fifth straight of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and positive free cash flow, and net loss has been improving.

What's wrong with the market's view of Roku?

Roku stock was a terrible performer last year, but it's starting to rebound. Investors are starting to realize that they've overdone the Roku crush, and it was looking like a bargain hiding in plain sight.

Netflix's very positive recent quarterly report, with its highest-ever quarterly add-ons by number, demonstrated that streaming is very much a growing industry right now, and Roku is well positioned to benefit as the top operating system. Organic growth is one thing, as existing viewers have more subscriptions and are watching more, leading to more opportunities to place ads and generate ad sales. But Roku is also expanding internationally and experimenting with new opportunities for advertising, like its home page, which it has only recently started to monetize in a big way.

Roku stock still trades at less than 3 times trailing-12-month sales, and it may be one of the few bargains still available in a bloated market.