ROKU
Roku, Inc.
$136.53
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 59.4% above fair value
You pay
$136.53
Bear
$57.23
Fair
$85.63
Bull
$119.06
Bear
$57.23
-58.1%
11% stage 1 growth, 12% discount
Fair
$85.63
-37.3%
18% stage 1 growth, 12% discount
Bull
$119.06
-12.8%
23% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (18% base case)
Terminal Value % of EV
40%
Implied Market Multiple
88.4x
Market is pricing in (growth)
31.1%
vs 17.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $153.53 from 45 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $85.63 per share.
Warnings
Stock-based employee pay equals 401% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $153.53 (from 45 analysts). Our estimate is 63% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions