What happened

Shares of action-camera company GoPro (NASDAQ:GPRO) rose by 17.7% in November, according to data provided by S&P Global Market Intelligence. This has been a terrible stock for investors, especially those who bought in during its early months as a public company. It's down more than 90% from the highs reached during its first year on the market, and trading for just over a third of its IPO price. But the company has changed its business model, and recent results suggest that management has started to turn things around.

So what

On Nov. 5, GoPro reported strong results for the third quarter. Revenue was up 114% year over year to $280.5 million. More importantly, because of the growth in its direct-to-consumer business, its profit margin increased substantially. This allowed GoPro to report net income of $3 million according to generally accepted accounting principles (GAAP).

A businesswoman draws an upward arrow over a bar chart displayed on a transparent touchscreen.

Image source: Getty Images.

Furthermore, GoPro offers a subscription service that includes unlimited video storage in the cloud, discounts on accessories, and a device warranty; that deal has been increasingly adopted by its customers in 2020. In Q3, the number of subscribers surged to 501,000 -- up 65% year over year and up 35% from Q2. And its subscriber growth has accelerated since then. In the wake of the company's Black Friday events, it was up 670,000 subscribers, and management believes it's well-positioned heading into 2021. These positive results were the catalysts that sent GoPro stock to three-year highs.

Now what

Investors considering the stock should keep in mind that GoPro hasn't strung together two consecutive profitable quarters in five years. Typically, it reaches profitability with a new camera launch. Last year, the company launched the HERO8 in the fourth quarter. This year, it launched the HERO9 in the third quarter. Therefore, looking at year-over-year comparisons isn't an apples-to-apples exercise. If this is truly a turnaround story, fourth-quarter results should confirm the trend. Until then, it would be fair to wonder if GoPro's success in Q3 was merely related to the timing of the HERO9 launch.

Additionally, GoPro is currently selling the HERO9 camera packaged with a one-year subscription on its website. For this reason, I wouldn't take its recent subscriber growth as a true indication of consumer demand