Roku Brings Howdy to Prime Video: Will the Move Boost Subscriber Base?
Roku ROKU is benefiting from accelerating streaming adoption and higher platform revenues. The company is accelerating its subscription business, as streaming aggregation becomes an increasingly important part of how consumers discover and access content. Roku plans to add more tier-one partners, launch subscription bundles and expand internationally, with Mexico’s FIFA World Cup 2026 expected to be a meaningful near-term catalyst. Owned-and-operated services, Howdy and Frndly TV, strengthens recurring revenue base within the same ecosystem.
Roku is expanding its streaming service, Howdy’s footprint, with the launch on Amazon’s AMZN Prime Video in the United States for $2.99 per month. Howdy offers thousands of titles and more than 10,000 hours of entertainment from Disney Entertainment, FilmRise, Lionsgate, Sony Pictures and Warner Bros. Discovery, alongside select Roku Original titles.
The expansion is expected to boost the subscriber base. Streaming households surpassed 90 million by year-end 2025, adding roughly 10 million net new households during the year. The fourth quarter of 2025 delivered Roku’s biggest-ever quarter for premium subscription net additions, underpinned by AI-powered content discovery and the self-serve Ads Manager platform, attracting small and mid-sized business advertisers.
Looking ahead, Roku’s guidance signals continued confidence. The company expects to surpass 100 million streaming households this year. First-quarter 2026 platform revenues are expected to grow more than 21% year over year, while 2026 platform revenue guidance calls for 18% growth to approximately $4.890 billion. Adjusted EBITDA is projected at $635 million for 2026, implying more than 50% year-over-year growth and further margin improvement.
Roku Faces Intensifying Competition
Roku faces stiff competition in the streaming space from the likes of Amazon and Netflix NFLX.
Amazon’s Prime Video has approximately 315 million ad-supported viewers globally, a sharp increase from approximately 200 million in early 2024, which shows the rapid extension of its ad-supported tier and growing relevance in the streaming market. Streaming is tightly integrated into Amazon’s business, which generated $21.3 billion in Q4 revenues, with year-over-year revenue growth of 22%. The company emphasized that Prime Video ads are now a meaningful contributor to this growth.
Netflix’s expansion into newer content categories, including video podcasts and live events (World Baseball Classic in Japan), is expected to boost top-line growth. For 2026, Netflix now expects revenues between $50.7 billion and $51.7 billion. This represents 12-14% year-over-year growth (or 11% to 13% foreign exchange neutral growth). Netflix expects this advertising business to roughly double again in 2026 to $3 billion.
ROKU’s Share Price Performance, Valuation and Estimates
Roku shares have dropped 18.9% year to date, underperforming the broader Zacks Consumer Discretionary sector’s fall of 10.8%.
ROKU Stock’s Price Performance
Image Source: Zacks Investment Research
Roku carries a Value Score of C, which indicates a stretched valuation. In terms of price-to-sales (P/S), Roku is trading at 2.26X, which is a premium compared with the broader sector’s 2.24X.
ROKU’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ROKU’s 2026 earnings is pegged at $2.10 per share, unchanged over the past 30 days. The company reported earnings of 59 cents in the year-ago quarter.
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Roku, Inc. Price and Consensus
Roku, Inc. price-consensus-chart | Roku, Inc. Quote
Roku currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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