One way or another, GoPro is going to be an IPO to remember this year.

It isn't often that such a transformative brand comes public and there's no doubt that GoPro fanatics will rush out to buy shares, a la Facebook or Twitter. But before you do, take a close look at the business you're buying and whether it's sustainable long term or just a fad.

GoPro's original Hero camera, which started a phenomenon. Source: Sebastien Launay via Wikimedia

Has GoPro's explosive growth stopped?
Depending on how you look at GoPro's financials you can see rare profitable young company with almost unlimited potential, a company in the early phases of decline, or anything in between.

The bullish argument comes from GoPro's historical growth and incredible profitability, even as a young company. According to its recent S-1 filing with the SEC, the company grew 125% in 2012 and 87% in 2013 to $985.7 million in sales. But unlike most young and growing companies GoPro also made a profit of $60.6 million last year.

The challenge comes when you look at 2014. Sales were down 7.6% in the first quarter to $235.7 million and net income dropped by more than half to $11.0 million.

Which is the real story here? Is GoPro nearly doubling sales every year or did 2014 mark the turning point in market saturation for its action cameras?

Competition is only improving
Part of the problem is increased competition in action cameras. When the first GoPro was launched the concept of a wearable camera was novel to the market. But today Google Glass has a camera, nearly every smartphone does, and other action focused cameras are popping up in the market.

One reason is GoPro's partner Ambarella (NASDAQ:AMBA), who makes chips that process and encode video data before sending it to memory. It's the sole provider of these chips for GoPro and as it's grown and learned from GoPro's success it has launched into new markets with an improved product.

The security market is growing, wearables are just in their infancy, and Ambarella is ironically one of the companies driving adoption of these camera technologies. In other words, competition is just starting to heat up.

DJI's Phantom 2 drone is designed to mount a GoPro camera. Source: DJI

A world of opportunities
The good news for GoPro is that the company is the best brand in the action camera market and can launch into new products if it chooses to.

It's already launched video-editing software and an app that connects wirelessly to the GoPro Hero 3+. I think other wearable devices in smaller form factors and potentially lower quality (i.e., not 4k) video will be the next growth angle GoPro will go after.

Let's also not forget that the durable construction of the GoPro Hero is getting it designed into equipment like small drones, helmets, and a plethora of accessories. As products are built around the GoPro, it becomes even more useful to consumers and the brand equity grows.

A risky but interesting IPO
GoPro is now a household name but that doesn't mean it's a guaranteed success on the market. Ambarella's diversification into new products and improving technology from competitors means the market is becoming crowded for action or wearable cameras. There's also nothing inherently "sticky" about owning a GoPro. When it's time to upgrade there's no reason not to switch to something different.

The question is: Does GoPro have a new product or app up its sleeve that can keep revenue climbing or is it going public just as revenue begins a long-term decline?

Depending on the IPO price, the better value could be Ambarella, who has a $760 million market cap and high 30 P/E ratio, but it's also a critical component to GoPro's products and is diversified into security, wearables, and other markets. Given the same earnings multiple, it's a safer bet than GoPro.

At the very least, GoPro will be an interesting stock to watch when it goes public, whether it's a huge success or a flameout like we've seen from recent tech-related IPOs.