Virtual-reality cameras are a a large potential market for GoPro. Image source: GoPro.

What: Shares of action-camera company GoPro Inc (GPRO -0.95%) jumped as much as 14.8% today after reporting second-quarter earnings. At 2:40 p.m. EDT, shares were still up an impressive 12.7%.

So what: On the surface, the quarter looked like a disaster more than a reason to rejoice. Revenue dropped 47%, to $220.8 million, and the company swung from net income of $35.0 million to a loss of $91.8 million. But GoPro appears to be turning the corner operationally, and with shares down 80% from their 52-week high, most of the negativity is priced into the stock. 

After reducing its product lineup to three models, inventory dropped 36% at GoPro, and channel inventory fell an estimated 35%. This is ahead of the launch of Hero 5 and the drone Karma later this year, which are expected to bring GoPro back to profitability by the end of the year.

Now what: Slowly, GoPro is working through the problems that have led to the stock's steep decline. Inventory is down, software offerings are improving, and new products are coming just in time for the holidays. If all goes well, GoPro could be a hot product and return to strong profitability. The second quarter may just be green shoots for now, but they're positive steps toward the company's goal of sustainable profits, and that's why the market is excited today.