ROKU
Roku Inc
Price:  
61.36 
USD
Volume:  
3,749,656.00
United States | Entertainment
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ROKU WACC - Weighted Average Cost of Capital

The WACC of Roku Inc (ROKU) is 7.5%.

The Cost of Equity of Roku Inc (ROKU) is 8.30%.
The Cost of Debt of Roku Inc (ROKU) is 7.00%.

Range Selected
Cost of equity 6.30% - 10.30% 8.30%
Tax rate 2.10% - 3.40% 2.75%
Cost of debt 7.00% - 7.00% 7.00%
WACC 6.6% - 8.5% 7.5%
WACC

ROKU WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.52 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 10.30%
Tax rate 2.10% 3.40%
Debt/Equity ratio 1 1
Cost of debt 7.00% 7.00%
After-tax WACC 6.6% 8.5%
Selected WACC 7.5%

ROKU's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for ROKU:

cost_of_equity (8.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.