How GoPro can regain its mojo

GoPro regains its mojo

GoPro is best known for its adrenaline-fueled video, but the camera maker has offered shareholders an electrifying ride as well.

While the stock is still up over 100 percent since its IPO in June, it's also down nearly 50 percent from its all-time high of $98 in October.

Among the causes of concern for investors: increasing competition and, more immediately, an impending lock-up expiration.

Thursday, analysts expect GoPro to reports earnings per share of 70 cents on revenue of $580 million, which would represent 61 percent growth on the top line.

What explains that expected surge in sales?

Analysts think that the GoPro camera was a popular holiday gift. Michael Pachter of Wedbush Securities estimates that GoPro shipped at least 2.3 million cameras in the fourth quarter versus 1.4 million in the year-earlier period.

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Looking ahead, analysts say the question for GoPro is how effectively the company can now extend its reach into new geographies and products.

For example, GoPro currently dominates 94 percent of the action camera market in the United States, according to NPD. Now analysts argue that the company needs to expand its footprint, especially in China.

"What we're seeing, clearly from the Apple results, is that discretionary spending power in China is going up rapidly," said Alex Gauna of JMP Securities. "One of the perfect companions to those hot selling Xiaomi and iPhones is certainly a GoPro action camera."

There's also the expectation that GoPro will diversify its portfolio of products, perhaps even its own drone. Analysts think a drone would make smart strategic sense.

"It would be strange for GoPro not [to] be involved considering the branding that the company has," said Charlie Anderson of Dougherty & Co. "Today, most drones already attach GoPro cameras. That's how the images are taken. So there's a natural fit for the company to enter the market."

Finally, beyond devices, there is the expectation that the company can continue to leverage its content as a successful media brand. Already, there are GoPro channels on YouTube, Xbox, and Virgin America. And the company just announced that a GoPro channel is coming to Roku this spring.

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Of course, the most obvious point of contention among investors is GoPro's valuation, with the stock trading at around 40 times forward earnings. Bears say that's too expensive while bulls argue that the company deserves that valuation given its growth prospects.

Investors could have a better sense of which side is right after GoPro reports earnings results after the close Thursday.