Roku (NASDAQ:ROKU) is a very polarizing stock with big bears and big bulls on each side. The bulls call Roku the next Netflix (NASDAQ:NFLX). They think that Roku stock can and will head to $100, $200, and higher over the next several years as the over-the-top (OTT) media revolution goes global.

Meanwhile, the bears call Roku the next GoPro (NASDAQ:GPRO). They think that Roku will inevitably be eaten alive by competition given the lack of competitive advantages the company has and that Roku stock will fall back to $20 and lower.

Who is right? It is tough to tell at this point. And that is why Roku has bounced from $20 to $60 to $30 to $50 over the past several months. Nobody really knows what is in store long term for Roku.

Given the extreme volatility in the stock, and the lack of clarity related to the company’s long-term growth narrative, I think that the best move here is to wait on the sidelines. If this is the next Netflix, you won’t miss much by waiting to buy later. And if this is the next GoPro, you won’t miss much by waiting to short later.

Here’s a deeper look.

Why Roku Stock Could Head Much Higher Than $50

There is a reasonable argument for Roku stock to worth much more than $50 today.

Roku has managed to maintain market-leading 37% market share in the U.S. OTT device market.

Over time, competition will inevitably bring Roku’s market share down as bigger players like Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) leverage their smart home tech to drive OTT device adoption rates up.

But, Roku could still very well maintain 30% market share in five years due to content-neutrality.

At that time, the OTT device market will be much bigger. Currently, only 40% of U.S. broadband homes have an OTT device. In 5 years, that number could very well be in the 80-90% range as cord-cutting trends persist. On 120 million TV households in the U.S., that implies around 100 million OTT households in the U.S. in five years.

A 30% share of that market implies 30 million U.S. users for Roku.

On the international side, Netflix’s international business is about 20% larger than its domestic business. Extrapolating that out, then Roku could have about 36 million international subs in five years, for a grand total sub base of 66 million.

Platform ARPU could trend towards Facebook (NASDAQ:FB) levels of around $30 in that time frame, implying platform revenues of nearly $2 billion. Player revenues should stabilize around $300 million per year. Assuming a 75% gross margin for platform revs and a 10% gross margin for player revs, Roku is looking at just over $1.5 billion in gross profits in five years.

Assuming a 40% opex rate, I think that flows down to roughly $4 in earnings per share. A growth-average 20 forward multiple on that implies a four-year forward price target of $80. Discounted back by 10% per year, that equates to a year-end price target of $60.

Why Roku Could Drop to $30

On the flip-side, there is also a reasonable argument for why ROKU stock will head back to $30.

Right now, Amazon is on fire in the OTT device market. Their huge market share gains are coming at the expense of Google. But, over time, Google could get its act together here, and leverage its growing portfolio of smart home tech to drive Chromecast adoption rates up. In that scenario, both Google and Amazon are red-hot and gaining market share.

Also in that scenario, Roku loses considerable market share because the company lacks a smart home portfolio to bolster Roku player adoption rates. Thus, Roku’s market share could very well fall to 25%, implying just 25 million U.S. subs in five years.

Also, international expansion may hit some major road-bumps due to Amazon and Google’s global mind-share. As such, the international business may simply be the same size as the domestic business, implying 50 million total subs in 5 years.

ARPU could plateau around $25. Platform revenues could fall $200 million or less. Gross profits should remain 75% in the platform biz and 10% in the player biz regardless, but the opex rate could be in the 40-50% or higher range.

Under those modeling assumptions, Roku will be lucky to do $2 in earnings per share in 5 years. A 20 forward multiple on that implies a four-year forward price target of $40. Discounted back by 10% per year, that equates to a year-end price target for ROKU stock of $30.

Bottom Line on Roku Stock

If Roku maintains market share both domestically and internationally, then global OTT adoption tailwinds will push this stock towards $60 by year end. On the flip-side, if Roku’s market share slides at the expense of Google and Amazon, then competition headwinds will drag this stock down to $30 by year end.

I think the bull case has 60% likelihood, and the bear case has 40% likelihood. That leads to a weighted-average present value on ROKU stock today of $48. Perhaps not coincidentally, that is where the stock trades today.

As such, I am neither a buy nor seller here. Instead, I’m a seller on rallies towards $60 and up, and a buyer on dips towards $30 and lower.

As of this writing, Luke Lango was long FB, AMZN, and GOOG.