Hurry. Buy your GoPro shares now. Or should you?

On Thursday 26th. June 2014 NASDAQ will be handling an IPO for GoPro. They  plan to issue 17.8 million shares at around $21-$24. That will place a value on GoPro of about $3.4 billion.

Should you invest or not?

Here's a potted history of the company:

GoPro logo

In 2002, while surfing in Australia, Nick Woodman wanted to take photos and videos while on his board. Using existing cameras was just too expensive and complicated. He saw this as a huge opportunity and wasted little time in building GoPro cameras.

He tried pitching to investors for funding, but there was little interest. The idea seemed too risky. Undaunted, Woodman sold beach trinkets out of his VW van to raise money. The plan worked out extremely well and also provided an interesting idea for GoPro cameras: attaching a cool-looking strap.

From the start, customer demand was robust. From 2011 to 2013, revenues shot up from $234.2 million to $985.7 million, while profits went from $24.6 million to $60.6 million. Numbers like that made the GoPro IPO a no-brainer. Woodman learnt from Apple’s success, making sure GoPro cameras were top-quality, premium-priced products. This meant making the videos high-quality, creating a sleek design and using cutting-edge technology.

GoPro has also soared on a standout brand, and social media was critical to that success. Woodman invested in software to make it easy to edit and share videos, leading to more than 4.3 million downloads of GoPro Studio. The company has more than 7.2 million Likes on Facebook, 2 million followers on Instagram and almost a million followers on Twitter. But probably the most important channel for GoPro cameras has been Google’s YouTube. For the first quarter of 2014, customers averaged about 6,000 daily upload, totalling more than 1 billion views.

GoPro has not yet begun to profit from any of this social media activities. This might change soon. No doubt social media could represent a good revenue opportunity and a boost to the GoPro IPO.

However, as with any new company, there are still some nagging issues. During the first quarter of 2014, revenues dropped by 7.6% to $235.7 million and net income fell by more than half to $11 million.

This may be a temporary blip, but it could also mean that the market for GoPro cameras is limited. How many people really want this type of technology? If film makers, broadcasters, video professionals and all those consumers start to feel that an iPhone or Android device is good enough, that could be devastating for the company.

Strong competition is also emerging from the likes of Canon, Nikon, Samsung, Sonyand even Garmin. You might even speculate about what Apple or Google are about to do.

It has been reported that the GoPro IPO is likely to be oversubscribed with strong buying from fans. However, as seen with many high-profile IPOs, the stock is likely to be volatile. So is it probably better to wait some time until making a purchase after the launch?