Action camera maker GoPro Inc. (NASDAQ:GPRO) has come back in a big way. The GoPro stock price has skyrocketed 25% over the past three months causing many to wonder whether or not the firm has finally turned things around after years of turmoil.

However, GoPro stock is still a far cry from its $86 price tag back in 2014 when the compact HD cameras were in a league of their own. Much of the optimism surrounding GoPro right now is coming off the back of the company’s better than expected earnings report, but I think traders would be wise to hesitate before jumping in with both feet. There’s no denying that GoPro’s management has made some necessary changes that have helped the firm trim the fat, but I don’t see GoPro stock continuing to thrive for long.

Financials Are on the Upswing

Perhaps the biggest revelation from GPRO’s quarterly results was the fact that the firm’s financials improved significantly. Revenue posted double-digit growth, a huge improvement from previous quarters, and unit volume rose by 40% from the previous year. Management’s efforts to transform GoPro into a leaner organization appeared to be paying off as operating expenses declined and net income improving significantly.

With the all-important 2017 holiday shopping season on the horizon, management is working toward better inventory control, something the firm has struggled with over the past year. The HERO6, the firm’s latest camera, is due out later this year and GoPro CEO Nick Woodman says the firm isn’t planning to meet demand, focusing instead on keeping inventory levels manageable at year-end.

Good but not Great News for GoPro stock

That’s good news, and I think GPRO is doing the right thing by paring back its inventory. However, while creating a leaner organization and getting inventory under control will help in a more competitive environment, I’m not sure that will be enough to give GoPro stock the momentum it needs to move forward.

Even if the HERO6 strikes a note with consumers, and even if inventory management is better this year, I don’t think GPRO has enough of a moat to rely solely on device sales. Furthermore, I don’t think the HERO6 will be the lifeboat many are hoping for.

There isn’t much information available about the HERO6 and the features it will offer and it’s hard to imagine that the camera will offer something compelling enough to convince GoPro fans to upgrade, or convince those buying their first action camera to pass up rivals like Garmin Ltd (NASDAQ:GRMN) and Samsung.

Worrisome Industry

Then theres the worry that the action camera market is altogether shrinking. Advances in smart-phone cameras have made it much harder to make a case for buying an entirely separate device to record video. Hand-held cameras are losing their luster as smartphone makers improve recording quality, so GoPro isn’t competing only with rival camera-makers, the firm is also fighting to keep its own industry alive.

What About Drones?

Theres a similar problem when it comes to GoPro’s drone offerings. GPRO’s Karma drone is the second most popular in the country, behind DJI Innovations, whose drones have been touted as being better, cheaper options. Can GoPro claim the top spot in the drone industry? It’s hard to say for sure, but the firm’s unfortunate reputation for botching new product roll-outs makes me skeptical.

Can Software Save GPRO?

Another big takeaway from GoPro’s earnings call was the firm’s improved software offerings and the ability for users to create video content that can easily be shared on social media. Admittedly, this is a great step forward for GoPro. One of the biggest problems the firm was facing was the inability to easily transfer footage off of the camera.

Woodman sees the video editing software, dubbed QuikStories, will make GoPro cameras into mobile storytelling devices. He says the cameras will allow users to make more immersive stories than they could using just their smartphones.

It remains to be seen whether or not this feature will be enough to revive the brand. On one hand, video content is huge right now in the social media space, but on the other, popular video services like Instagram stories and Snapchat rely on quick, in-the-moment snippets of users’ lives. Adding another device, no matter how “seamless” it is, complicates the process and adds a layer of inauthenticity.

The Bottom Line

GoPro is making improvements, but GoPro stock still is in a precarious position. Not only is GPRO extremely vulnerable to competition, but the action camera industry itself is in danger of extinction.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.