Be a heroic investor, but understand the risks. Source: GoPro's S-1.

Shares of action camera maker GoPro (NASDAQ:GPRO) have been on a ride so wild it may appear in its own video. After an initial public offering price of $24 per share in June, the stock quickly rocketed up to nearly $50 per share. However, after the early euphoria, shares quickly fell to their current price of approximately $38.

As often occurs with new and volatile companies, opinions vary widely as to its future path. As such, it pays for potential investors to consider both a bullish and a bearish argument before deciding whether to buy the company. Here are three reasons why GoPro's stock could fall further.

It isn't a media company, despite its best intentions
GoPro has recently touted its media intentions, going as far as calling itself a media company during the IPO process. Just how much money was GoPro making from content at that time? Well, according to its S-1: "As of December 31, 2013, we had not derived revenue from the distribution of, or social engagement with, our content on the GoPro Network."

In contrast, although not specifically broken out, Google's YouTube revenue was pegged at $3.5 billion during 2013; after payments to partners that number drops to $1.5 billion. Even if GoPro can grow revenue from zero to one-tenth of YouTube's revenue -- a nearly impossible feat -- assuming all other factors are equal this would add $350 million per year to GoPro's bottom line. Since we only have a half-year until GoPro's annual results, we'll halve that to $175 million. Since analysts estimate GoPro's revenue to be $1.24 billion for this fiscal year, the additional $175 million would be roughly 12.3% of its total.

Top and bottom-line growth is nothing
We all know the seduction of investing in IPOs: You get in on the "ground floor" of a high-growth company and rake in the benefits. Well, GoPro isn't necessarily high growth when you consider a year-over-year comparison between the first two fiscal quarters of 2013 and 2014.

Fiscal QuarterQ1' 13Q2' 13TotalQ1' 14Q2' 14TotalGrowth
GoPro Revenue 255.1 177.1 432.2 235.7 244.6 480.3 11.1%

Source: GoPro's 10Q's and S-1. Figures in Thousands.

As you can see, in 2014 GoPro increased its revenue 11.1% year over year. A solid increase, absolutely, but not exactly groundbreaking when you're looking at a company that is trading at a price-to-sales ratio of nearly three times on a trailing-12-month basis.

GoPro was actually profitable prior to its IPO, but that trend has reversed. After reporting net income of nearly $50 million in the holiday-laden fourth quarter of 2013, GoPro reported another profit of $11 million in its first quarter and a loss of nearly $20 million in its recently reported second quarter. On a year-over-year basis, this year's first and second quarters were both worse than last year's results, which saw the company report a $16.7 million profit and a $5.1 million loss, respectively.

How differentiated is this product?
Go-Pro must also watch its back for competition. Just a mere decade ago, digital cameras were all the rage. However, with the addition of cameras in smartphones and tablets, that product category has essentially been disrupted.

Although the camcorder market is improving, in part due to GoPro's success, each new phone iteration has the potential to encroach upon its territory. So far, GoPro has done well by filling a niche in the camcorder market--the company's market share has exploded from 11% in December 2011 to 45% in 2013.

But GoPro understands this puts a large target on its back. From the S-1:

Moreover, smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. It is possible that, in the future, the manufacturers of these devices, such as Apple and Samsung, may design them for use in a range of conditions, including challenging physical environments, or develop products similar to ours.

If a multiproduct giant such as Apple or Samsung entered this action camcorder business or brought that functionality to its smartphone lineup, GoPro could really suffer. However, the company appears to be cozying up to potential rival Microsoft by specifically mentioning their recent partnership in its S-1. It appears that Microsoft is returning the favor by working on video stabilization algorithms for GoPro cameras in its research labs.

Final thoughts
Before you purchase a company, you should always prepare both a bullish and a bearish thesis. For such a highly valued company, GoPro faces issues on a host of fronts, including monetizing its content, continuing to grow a top line that is fully dependent on a single product with minor variants, and possible competition from deep-pocketed rivals. It appears GoPro's wild ride will continue; I just hope someone's filming it.