Shares of GoPro Inc. (NASDAQ:GPRO) have been through the wringer in the last few years, going from hot IPO to dropping over 90% as investors fled the stock. Along the way, the company made some bad product decisions, shed its media plans, laid off workers, and introduced new product lines with a drone and 360 camera

GoPro's stock doesn't trade too far off its all-time low, indicating that there's still a lot of pessimism built into the stock, which may create a buying opportunity for investors. 

GoPro's Hero 6 camera.

GoPro's Hero 6. Image source: GoPro.

GoPro's new strategy in action cameras

One of the things that got GoPro in trouble a few years ago was building too many camera models. In the 2015 holiday season, the company had six cameras, which fostered a lot of confusion for buyers, as well as inventory management problems. Another problem was that it was too difficult to get content from GoPro's cameras to a phone or on to social media, creating a usability gap for consumers. 

Over the last two years, GoPro has reduced its product lineup to a "good, better, best" list of action cameras, the Karma drone, and the new Fusion 360 camera. It's a simple lineup and GoPro has actually made its inventory problems even easier by only upgrading only the "best" action camera -- Hero 6 -- for the 2017 holiday season. 

On the usability side, GoPro has introduced a cloud service that will automatically upload photos and videos from a camera that's connected to Wi-Fi and easy editing apps like QuikStories

These improvements create a foundation GoPro can build from, but they don't make the stock a buy by themselves. 

GoPro has addressed critical flaws

The two financial flaws that could have killed GoPro were a level of inventory that became unmanageable and operating expenses that got out of control. GoPro is starting to correct both problems, which you can see in the chart below. 

GPRO Total Operating Expenses (Quarterly) Chart

GPRO Total Operating Expenses (Quarterly). Data by YCharts.

Operating expenses on a non-GAAP basis are expected to be under $495 million in 2017 and will likely be below that on an ongoing basis. Management also seems to have wrapped its head around its inventory problems. CEO Nick Woodman said earlier this year that he was aiming to keep the channel slightly undersupplied of GoPro cameras in 2017 to keep from building too much inventory. Long term, that's a strategy that'll take a lot of risk out of the business. 

The key to a stock turnaround

GoPro has reduced the risk in its business by cutting operating expenses and inventory, but it still needs to keep selling high-margin cameras at a rapid rate to return to long-term profitability. I think it has the products and strategy to make that happen and the Fusion camera, in particular, will capture the imagination of consumers. 2017 could be the year a financial turnaround finally shows itself to investors. 

I think GoPro's improved product lineup and operations make the stock a great buy long term, and I've given the stock a thumbs-up on My CAPS to track the stock against the market. The 2017 holiday season may show an early indication whether GoPro's strategy is going to pay off. 

Travis Hoium owns shares of GoPro. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has a disclosure policy.