John Fichthorn, co-founder of Dialectic Capital Management, says it's time to short GoPro as competitors have begun to undercut the market leader by offering similar products for "a fraction of the price."
"The whole market is getting a lot more competitive thanks to GoPro's impressive marketing victory," Fichthorn said Thursday on CNBC's "Halftime Report."
He said new competitors, including SJCAM Transporte and Xiaomi, are offering wearable cameras that are "virtually identical to the GoPro, [with the] same components in many cases," for less than half the price of a GoPro device.
Earlier this week, Xiaomi launched the Yi Action Camera for $64, about half the price of the entry-level GoPro Hero, which retails for around $130. GoPro shares fell about 5 percent on the news. The stock was down 4.8 percent to $41 in Thursday afternoon trading.
However, he notes that the less-expensive cameras usually don't offer 4K TV quality, an essential standard for GoPro, but he says user reviews indicate that they're just as good as GoPros.
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GoPro's growth outlook has changed pretty dramatically since last August when the company had a great product cycle in front of it, Fichthorn said. He expects the wearable camera maker to struggle with its margins and revenue growth going forward.
Fichthorn also is concerned about GoPro's media business, GoPro Channel, which he says seems more like a costly marketing ploy working to get users in the GoPro ecosystem—than an actual entity with growth potential.
If the media business turns out to be a marketing expense, there's an opportunity for "multiple compression."
GoPro shares have endured turbulence since the company went public in late June. After pricing at $24 per share, the stock floated to a high of $98 in October, only to give back much of its gains to trade in the low $40s.
The company currently has about 94 percent of the action camera market, according to Reuters. Sony comes next with market share of near 3 percent.