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Source: GoPro's S-1.

Investors in GoPro's (NASDAQ:GPRO) IPO are a pretty ecstatic bunch -- and for good reason, as the company's stock is up nearly 75% from its public debut.. Shares of the action video photography company rocked the Nasdaq with the adrenaline-fueled rage of one of its users' signature videos. But after the company and early investors benefited from a $3 billion valuation, we as investors have one question: why the enthusiasm?

Why did GoPro need the money?
For IPO and subsequent early investors, it is always important to ask yourself that question. Because, at its heart, investing is simply entrusting your money to another person -- an agent -- for returns. One great thing about an IPO is that the company must actually tell you in plain English what it plans on doing with your money.

Here's what GoPro said in its S1 filing about what it is doing with the IPO proceeds [emphasis added]:

The principal purposes of this offering are for general corporate purposes, including working capital, and to repay our term loan under our credit facility, to create a public market for our Class A common stock and to facilitate our future access to the public equity markets. At March 31, 2014, the outstanding balance of the term loan was $111.0 million and bore interest at the rate of 2.75% per annum.

So with GoPro raising roughly $430 million from its IPO, investors should ask whether spending a quarter of that to pay off a loan was the best use of the cash.

What GoPro did right
Accessing the public equity markets is an important part of both capital attainment and value discovery. GoPro's IPO valued the company at $3 billion, and the subsequent run-up has pushed the company into the $5 billion range. The public market will do the company well in the future as it taps into it for subsequent offerings.

And GoPro will need more money. Right now, the company is in a transition of sorts. GoPro is looking at becoming more than a device company. Although it currently derives "no significant revenue" from the distribution or social engagement of what the company calls the "GoPro Network," it is looking at monetizing that content.

An interesting development is GoPro's agreement with Microsoft (NASDAQ:MSFT) for Xbox Live. The GoPro Channel for Live will involve an ad-sharing agreement, fees for third-party sponsorship, and the ability to direct sell devices. While this shouldn't be a huge-revenue driver initially -- especially for Microsoft -- it does show that GoPro's management is committed to its goals of growing social.

Couldn't you just refinance?
Still, this one is a head-scratcher: Why would GoPro spend nearly 25% of its IPO funds (nearly 50% if you count the shares the company proffered) to pay off a loan instead of refinancing? Although it appears the loan had some rather onerous clauses -- among them, an excess cash flow contractual prepayment obligation and scheduled quarterly principal repayments -- one has to ask why GoPro couldn't just refinance.

Although debt is sometimes thought of as a dirty word, it can be beneficial when used correctly. Interest from debt helps lower taxes by providing a shield of sorts for profit. Not only that, it lowers the overall cost of capital for the company.

Final Foolish thoughts
GoPro has an ambitious agenda -- not only does the company want to continue to boost a top line that has grown over 300% in the past two years, it also wants to grow in the social media space. These things are going to take investment, both in time and money. And while I understand the desire to become a debt-free company, I'd rather see investments in new products and media channels with the proceeds.

Jamal Carnette has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.