GoPro Inc (NASDAQ:GPRO) is starting to make the hard adjustments that could turn its business around in the long term. It's cut unprofitable segments, trimmed the product line, and is starting to increase margins and operational efficiency. 

Despite all of those changes, GoPro still hasn't demonstrated it can operate profitably. Here are the signs I am looking for that would indicate GoPro can turn its finances around in a sustainable way for the long term. 

GoPro's Hero7 lineup.

Image source: GoPro.

Great Hero 7 performance

When the Hero 7 camera was launched this fall, it looked a lot like all of the company's other new product launches. The specs of the camera were slightly better than previous models and the price points ranged from $199 to $399, which is what we've become familiar with from GoPro.  

What changed in a big way was GoPro adding new features that had never been included before. Live-streaming is finally a part of the lineup and high-quality stabilization is now included in-camera. If these features lead to a jump in sales, which I think need to be over the 3.3 million and 2.5 million units sold in the last half of 2016 and 2017, respectively, it would be a reason to consider the stock again. 

A new product comes along

If GoPro is going to be a big winner for investors, it needs to generate significant revenue from the product lineup beyond Hero 7. Fusion is a spherical camera that could grow into a solid revenue generator, but the spherical market will be small for the foreseeable future and I wouldn't count on Fusion to drive growth. 

There's not a clear growth path for GoPro beyond Fusion and the Hero family, and that may be the company's biggest challenge. Drones flopped, GoPro gave up on media ambitions, and with the product lineup shrinking, it could be tough to find growth. 

GoPro can still make money by increasing efficiency

With existing products, GoPro could return to profitability by increasing margins and lowering operating costs. Management says it can generate gross margin in excess of 40% in the long term and aims to keep operating expenses below $400 million. If GoPro can accomplish both goals, it could make an operating profit on around $1 billion of revenue, which is very reasonable to expect. 

What GoPro hasn't demonstrated is the ability to generate gross margin of 40% consistently. If it can do that, it may be a decent stock even without much growth. 

GoPro is in a hard place

GoPro has struggled with operations and new products the last few years, and until it can turn around those trends, the stock will continue to struggle. That's why I'm watching Hero 7, new products, and operational efficiency for signs it may be time to consider GoPro's stock again.