This has been a wild year for investors in Roku (NASDAQ: ROKU), the company behind the leading smart TV operating system in the U.S. In an odd twist, every single one of these things is true:

• Roku shares have rallied by 56% since bottoming out just two months ago.
• The stock is still down for all of 2024.
• Roku has nearly doubled since the start of 2023.

The volatility will only intensify this week. Roku will report its third-quarter results after the market closes on Wednesday, and the stock should be on the move again after the market gets a chance to take in the performance. Let’s go over some of the reasons why Roku stock could move higher this week.

1. Roku is marching to its own beat

It has been three months since Roku put out its guidance for the recently ended third quarter. At the time, management was modeling for $1.01 billion in revenue, an 11% year-over-year increase. Analysts are now targeting $1.02 billion, but don’t let Wall Street pros getting ahead of the summertime forecast dissuade you.

For the second quarter, Roku was targeting 10% top-line growth. It came through with a 14% jump. The bottom line outperformance was even better.

In late July, the streaming pioneer forecast a net loss of $50 million for the third quarter. Another deficit would stretch its streak of money-losing quarters to 11. An actual profit seems unlikely, but last time out, it turned its forecast for a $65 million loss into just a $34 million deficit. Roku has now delivered back-to-back beats on the bottom line of better than 42% to start off 2024. The trend is its friend, even as analysts continue paring back their loss forecasts.

2. It’s still winning on engagement

One big piece of the bearish narrative around Roku is that it competes against some of the wealthiest names in tech for control of our TVs. That said, it has continued to win that tug-of-war.

Roku’s platform was serving 83.6 million homes at the end of June, 14% more than it served a year prior. The 30.1 billion hours of steaming content it delivered in the second quarter was a 20% jump over the prior year. If its usage growth continues to outpace its account growth, it will be another demonstration of how sticky and engaging Roku’s hub is.

If that pattern reverses, it could be problematic. However, as long as the installed base of Roku users keeps growing — even if it slows to single-digit percentage growth year over year — it will be clear evidence that the company is still winning its bout against the three Magnificent Seven giants that are trying to muscle ahead of it.

3. It’s making the most of its opportunity

Analysts predict that Roku’s revenue will continue to grow at a pace in the low double-digit percentages through at least 2027. That’s also the year that analysts expect Roku will finally return to profitability. A lot of things could help it get back in the black faster.

Roku is already prioritizing capital expenditures on projects that have a clear path to positive earnings. It’s also making sure that it doesn’t squander its market leadership by taking advantage of organic opportunities to make its own luck. One of the core virtues of Roku’s platform is its agnosticism — it houses thousands of streaming channel apps that its users can download and enjoy. But investors should keep an eye on its homegrown content efforts.

Roku has been taking more steps to acquire content and programming at reasonable prices so that it can scale up effectively with its growing ad-supported functionality. The Roku Channel now rivals some of the largest premium apps on its hub, and viewers are noticing. In the second quarter, streaming hours on The Roku Channel were up nearly 75% year over year.

When it delivers its Q3 results, you can count on Roku to offer up some anecdotes about its progress in gaining more content that can keep its audience watching and its ad revenue growing. Roku has been one of the hottest streaming service stocks over the past two months, and with investors cradling the remote, it aims to make sure they don’t channel surf away.

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Rick Munarriz has positions in Roku. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.