There’s a divergence happening within the world of streaming entertainment. Netflix(NASDAQ: NFLX), the pioneer in the industry, has seen its share price fall 12% in 2026 (as of June 10). Roku(NASDAQ: ROKU), on the other hand, is up 11% this year.
These companies have different operations. But investors might look at them as a way to allocate capital to a growing and tech-forward industry. The performance of their shares might provide an indication as to the direction their businesses are going in.
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Which of these well-known streaming stocks is the better one to buy in June?
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The behemoth is slowing down
Netflix continues to dominate video entertainment. It has more than 325 million subscribers. Its massive scale supports huge profits. The company’s operating margin in Q1 was a reported 32.3%.
But it’s becoming clear that its next phase will be defined by slower growth. Management expects sales to rise 13.3% (at the midpoint) year over year in 2026, which would be the slowest pace since 2012 (besides 2022 and 2023).
During the earnings call, co-CEO Greg Peters mentioned that Netflix hasn’t yet captured 45% of its addressable market based on about 800 million total smart-TV-capable households in the countries it operates in. This means that there is still a sizable untapped opportunity to continue pushing growth. In theory, this is the correct view.
However, bringing these consumers on as Netflix subscribers will be much more difficult than it has been. Competition is incredibly fierce. Key markets like the U.S. and Canada are essentially saturated. And growth in emerging countries, like India, Brazil, and Mexico, will come from cheaper membership tiers that will have less impact on revenue.
Based on the stock’s 12% decline this year and the 39% fall from its peak in June 2025, the market might be accepting this new reality. Shares trade at a price-to-earnings ratio of 26.5, representing a 36% discount to the five-year trailing average.
It’s all about free cash flow
During the first quarter (ended March 31), Roku reported a year-over-year revenue gain of 22.4%, with the top line totaling $1.2 billion. This was the fastest growth rate since Q1 2022.
The company’s platform segment is operating at a high level. Its sales were up 28% in Q1, driven by a 27% increase in advertising and a 30% jump in subscriptions. This is a very high-margin revenue stream, with the gross margin coming in at 51.6%.
Roku’s position as an agnostic streaming ecosystem works to its benefit. While content companies spend copious amounts of money to develop shows and movies, this business provides a meaningful value proposition as the aggregator of all those offerings. More than 100 million households are Roku customers, giving the company’s smart-TV operating system the leading market share in North America.
Although revenue trends get the attention, it’s time investors start to focus on the profit story. The leadership team forecasts $360 million in net income this year. And in 2028, they expect Roku to generate $1 billion in free cash flow (FCF), up 107% from 2025. Cost controls and rising high-margin platform revenue are tailwinds.
Shares trade at 17.3 times the 2028 $1 billion FCF estimate. That’s a compelling valuation to pay, given Roku’s outstanding growth trajectory.
What’s your objective?
Both Netflix and Roku are in strong positions within the broader media and entertainment landscape. Investors looking to bet on streaming’s ongoing success are wise to consider these two businesses.
Netflix is the safer opportunity. It has established a leadership position, supported by a tech-enabled platform and strong content creation. And its impressive profitability is hard to overlook.
Roku’s advertising-heavy model is taking off, even though it can be more cyclical. But the company’s rising FCF is an encouraging trend that can boost shareholder value.
Investors deciding between these two streaming stocks must determine their ultimate objective. If you’re after a proven and stable company, Netflix is the better choice. But if you want the chance to achieve better returns, Roku has more upside over the next five years.
Should you buy stock in Roku right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Roku. The Motley Fool has a disclosure policy.
