The history of GoPro (NASDAQ:GPRO) stock has become one of excitement, but it is not the kind of activity that a GoPro action camera can capture. Competition from device makers took GoPro stock from almost $100 per share into penny stock status.

The release of a new action camera and a move to profitability have helped to take GPRO back above $6 per share. While a continued recovery for GoPro remains possible, investors will find it difficult to profit from GoPro stock under either of the two most likely scenarios for a rebound.

Smartphones initially could not replicate the quality and functionality of an action camera. For this reason, GoPro enjoyed initial success. However, as smartphones improved over time, consumers lost interest in standalone cameras, and GoPro’s sales numbers dropped. Consequently, GoPro stock fell from a high of over $98 per share in 2014 to a low of $4 per share in a timespan of just over four years.

Today, GoPro stands as an $875 million company competing with the biggest names in tech. Despite this disadvantage, they have managed to turn profitable and produce what many see as the best action camera available. However, this leaves only two likely outcomes for GPRO, and both will make it difficult for investors to profit from GPRO stock.

Is GPRO the Next Garmin?

One option involves a hope that GPRO will become the Garmin (NASDAQ:GRMN) of the action camera space. In many respects, GoPro has followed in Garmin’s footsteps. Garmin saw its stock plunge after the features of its GPS device found their way into smartphones.

To stay in business, Garmin turned to niche GPS products. Often used for sporting purposes, these devices did not attract the interest of smartphone companies. In time, this turned GRMN stock around. Now, GoPro has begun to pursue a similar strategy.

Those who see GPRO as the next Garmin have a reason for hope. In the action camera market, the new Hero7 stands out above its rivals. Moreover, the company’s moves into video editing and content creation have also attracted attention.

The Buyout Case

On the financial front, the recent turn to profitability also appears impressive. Profits take the forward price-to-earnings (PE) ratio to about 20. Over the next five years, Wall Street forecast average profit increases of 10% per year for the next five years. Some might buy GoPro stock on these metrics alone.

However, these multiples also open up the possibility of a different scenario—a buyout. Current valuations price the stock at a level where a firm such as Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) or Xiaomi (OTCMKTS:XIACF) could purchase the company.

Products such as GoPro cameras tend to fare better with an ecosystem to facilitate device functionality and the sharing of media. All three of these companies can provide such an ecosystem.

Risks for GoPro Stock

Still, despite these scenarios, the future for GPRO remains uncertain, and buying GoPro in hopes of either situation panning out is a questionable strategy.

For one, the company’s attempts to stay relevant have not always led to successes. For example, the company tried to add action cameras to drones, but the idea failed to take off. Such failures reduce the likelihood that GoPro stock will see a recovery like the one Garmin experienced.

Moreover, buying a company in hopes of a buyout remains a tricky situation. Sure, they could announce a buyout tomorrow. However, prospective buyers could also hold out for more stock price declines in hopes that they could buy at a lowered price. Given that possibility, a further drop in the stock price is not out of the question.

The Bottom Line

While I expect GoPro products will stay on the market for the foreseeable future, it may not necessarily lead to a surge in GPRO. Given the benefits of an ecosystem, I see a buyout as the more likely scenario to occur.

The more technology improves, the greater the need for product research funding and the need for an ecosystem. Although GoPro retains a product edge for now, larger and better-funded peers could catch up or surpass them in time.

Garmin continues to deal with this issue as mega-cap competitors take an increasing interest in their product niches. For this reason, one has to assume the competitive threat would remain for GoPro as well. A buyout eliminates that worry. It would also provide funding for product improvements and an ecosystem for camera output.

In either case, action photography enthusiasts will continue to benefit from GoPro products. Just don’t expect that to pay off for holders of GPRO stock.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.