What happened 

Shares of action camera company GoPro (GPRO 3.31%) fell 16% in February, according to data provided by S&P Global Market Intelligence, after the company reported fourth-quarter 2020 earnings. Shares recovered slightly early in March and were up 6% in the first four days of the month. 

So what 

GoPro is trying to sell investors on a recovery story and that narrative took a hit last month. The typically strong fourth quarter resulted in a 32.3% drop in revenue to $357.8 million and a 53.6% drop in net income to $44.4 million, or $0.28 per share.

GoPro lineup of cameras.

Image source: GoPro.

The good news is that subscribers to GoPro's products jumped 145% versus a year ago to 761,000. An increase in subscribers shows progress on GoPro's shift to a more subscription-centric business model, but the drop in revenue also shows that progress isn't happening as quickly as investors had hoped. 

There can be some timing differences in when GoPro recognizes most of its revenue, which pushed 2019 revenue from the third quarter to the fourth quarter when product shipments were delayed. But if we compare the second half of 2020 to a year earlier, camera shipments were down 13% to 2.03 million units and revenue dropped 3.2% to $638.3 million. Unless GoPro can start increasing shipments and revenue, it'll have a hard time recovering. 

Now what 

GoPro is in a tough position today because it isn't a growth stock and it's hard to argue it's a value stock given continued financial losses. Each time the company takes a step forward it seems to take another back. While the subscription business model might make sense for the long term, I have a hard time seeing the company generating a consistent profit in a highly competitive camera and cloud storage business. That reality hit shares hard last month.