Image source: Fitbit. 

Betting on millennials with active lifestyles has been a surprisingly bad bet for investors in Fitbit (NYSE:FIT) and GoPro (NASDAQ:GPRO). Shares of the leaders in fitness bracelets and wearable cameras have been rocked since peaking shortly after their respective IPOs.

It's been brutal. Fitbit stock has surrendered 76% of its value since topping out north of $50 this past summer. GoPro has shed 86% of its stock's worth since maxing out in late 2014. 

Both stocks are clearly out of favor, but the circumstances behind the tumbles are actually pretty different. GoPro's niche is simply out of favor. Fitbit's market is actually still growing, but competitive challenges are threatening market share and margins. 

Let's start with GoPro. It stunned the market with its first loss as a public company during the holiday quarter, clocking in with a brutal 31% plunge in sales since the prior year's seasonally potent period. Everyone wanted a HERO camera during the 2014 holiday shopping season, but this time around we saw hoverboards, smartwatches, smartphones, and video game consoles as the big-ticket items topping Christmas wish lists. 

Fitbit -- toiling away at the lower end of the wearable market -- is holding up considerably better. It sold 8.2 million connected health and fitness devices during the holiday quarter with revenue nearly doubling -- up 92% -- since the prior year. It posted a larger than expected profit for the quarter, too.

However, it was a Fitbit's cautious outlook that sent investors scurrying to the exits. It sees revenue growth decelerating sharply through 2016, targeting a gain of just 29% to 35% on the top line. It's also forecasting adjusted EBITDA to grow at an even slower pace than revenue, as margins will be challenged as it rolls out new products, invests in corporate wellness offerings, and builds out its digital health strategy.

The snapshot of each company's present state would seem to suggest that Fitbit is the superior play, but things can get tricky here. Fitbit has had some hiccups. The accuracy of its proprietary heart rate tracking technology has been disputed, and January's rollout of its first smartwatch left many industry watchers shaking their heads. A lot of tech and even athletic apparel companies have announced plans to take slices of the fitness bracelet market.

It also wouldn't be outrageous if someone suggested that the same layer of misplaced bravado at GoPro when it thought it would be a force in drones and streaming video platforms is happening at Fitbit. It's great that Fitbit has gotten some companies to subsidize the purchase of its trackers as a way to promote wellness, but at the end of the day this might just be a hardware company with a trendy product without the ability to parlay it into a digital health empire.

In terms of valuation, one would think that two stocks that have shed more than three quarters of their peak value would be screaming bargains. That's not necessarily the case at GoPro as Wall Street's bracing for deficits through the next couple of quarters. Fitbit, on the other hand, is trading at a cheap 11 times this year's projected earnings and just 9 times next year's target. However, those forecasts can get squashed pretty easily if Fitbit's investments for growth and competitive pricing pressures shrink profits in the future.

Both stocks offer compelling entry points here in the low teens. There is more upside to GoPro's stock if it's able to turn things around, but Fitbit seems to have more downside protection here as long as it remains profitable and growing. GoPro and Fitbit have been knocked down for good reasons, but both stocks have the ability to bounce back later this year if new products and digital initiatives play out. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.