What happened

GoPro (GPRO -7.43%) rose 16.1% in November after an impressive earnings report. It eventually fell off its monthly high, as small-cap stocks took a beating.

GPRO Total Return Level Chart

GPRO Total Return Level data by YCharts.

So what

GoPro had a great earnings report that crushed analyst estimates. Revenue rose 13% year over year, and adjusted earnings per share (EPS) were $0.34. Analysts only predicted $0.20 in EPS, so this was a big surprise to the upside.

Importantly, GoPro delivered strong results in key initiatives. Its mobile app now has more than 1.3 million subscribers and can also be used by people who don't own GoPro devices. Investors love to see the cash flow stability provided by subscription revenue.

The company's direct-to-consumer sales channel also expanded more rapidly than its traditional retail channel. That's an excellent sign for margins in the future. Finally, the company performed exceptionally well in product categories with high price points. That indicates strength among its target market, and also an ability to pass along higher prices to consumers.

A handful of analyst upgrades after earnings extended its momentum.

Person on ski slope with small action camera smiling and giving thumbs up

Image source: Getty Images.

Now what

GoPro has made some great steps to improve operational efficiency and improve sales. However, it still hasn't reached the outstanding sales levels it previously attained. It's also reasonable to expect subscriber growth to slow down a bit, as the company runs out of early adopters and power users who represent the lowest-hanging fruit.

GoPro operates in a competitive industry, and there will always be copycats that are willing to offer substitutes at lower prices. There are limits to the growth in this story.

The company is also at the mercy of small-cap market forces. Even if it's performing well, it can still get beat up if investors are moving out of smaller stocks. That definitely happens from time to time, and it impacted GoPro significantly over the last few weeks of November. Investors should be aware of that dynamic.

GoPro is an interesting long-term opportunity as a value stock. Its forward price-to-earnings ratio is under 10, and its enterprise-value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) is a similarly low 13.2. Those are astoundingly low numbers in today's market -- especially for a financially healthy, profitable company that has clear catalysts for at least modest growth.