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With its shares down a stunning 96% since their initial public offering (IPO) in 2014, GoPro (NASDAQ: GPRO) has been a nightmare for early investors. Few would have seen this underperformance coming, considering the company's previously strong brand and the burgeoning online content creation industry that made its products relevant.

Let's dig deeper to see what the next five years could have in store for this struggling camera company.

What went wrong with GoPro?

For those who don't closely follow financial markets, GoPro's stock collapse may be surprising, considering that its products are a household name for many millennial and Gen Z people. The company is known for pioneering the action camera, a portable videography tool that helps content creators film extreme sports. In the mid-2000s, its products were unique because of their size, video quality, and in-body stabilization, which was less common at the time.

But while GoPro's cameras really made a splash with the first GoPro Hero in 2004 and the GoPro Digital Hero in 2006, the technology has become more than a little stale two decades later.

Now, the company faces competition from rivals like China's DJI (which makes the Osmo action camera) and from smartphones, which almost make its products obsolete. Compared to action cameras, smartphones have similar or superior video quality and stabilization. They can also be mounted on harnesses for hands-free shooting, eroding GoPro's main economic moat.

A transformation strategy?

After its IPO in 2014, GoPro attempted to expand outside the action camera market with video drones and digital media. Both failed spectacularly. The drone project, Karma, was launched in 2016 but discontinued two years later after suffering from uncompetitive pricing and battery design flaws that caused drones to literally fall out of the sky on some occasions.

GoPro's media arm didn't fare much better. While the company tried to leverage its action cameras to create banded partnerships and original content, these efforts were stymied by bloated budgets and low returns. The division closed in 2016.

What will the next five years have in store?

GoPro's management seems to have abandoned their ill-fated attempts at large-scale business diversification. Instead, they are focusing on expanding and improving the core products that made their company: action cameras. GoPro continues to release new updates for its Hero devices. It's also expanding its retail footprint to new outlets, such as the consumer electronics store Best Buy.

But while these efforts could help GoPro tread water, they won't solve its core problem: Action cameras are a mature technology platform. And while the company can keep introducing incremental improvements to its flagship GoPro Hero camera, the changes are becoming less impressive.

Anecdotally, I can barely tell the difference between video footage shot on a GoPro Hero 11 (released in 2022) compared to the Hero 12 (released in 2023). It's hard to see how GoPro can stretch out this seemingly mature product line over the next five years. Over time, investors should expect consumer upgrading behavior to slow down.

GoPro may even lose pricing power as used or refurbished older models become increasingly attractive alternatives to its new cameras.

GoPro stock is not a buy

GoPro's fourth-quarter earnings highlight the severity of its challenges. Revenue declined 8% to $295 million, and the company's adjusted EBITDA fell 85% to $2.3 billion (this figure adds back non-cash outflows like stock-based compensation). And while shares are cheap, with a price-to-sales (P/S) of just 0.23, GoPro stock still isn't a good value because its business model doesn't look sustainable over the long term.

Should you invest $1,000 in GoPro right now?

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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.