GoPro Faces Competition, Potential Short Squeeze Amid Lock-Up Expiration

GoPro Inc GPRO continues a bounce off Tuesday's lock-up expiration, but questions about sustainability of its action camera market and the emergence of powerful competition have kept shares below their October highs.

A lock-up on more than 15 million shares expired Tuesday. GoPro changed hands recently up 6.5 percent at $65.52. Short interest fell a bit during the second half of November, from 11.1 million shares to 10.5 million of the company's 26.3 million shares outstanding.

The stock is up more than 100 percent from its July 1 initial public offering, but has tumbled from a high hit in October of $98.47.

Investors may be becoming more cautious in their appraisal as analysts raise questions about the size and sustainability of the action camera market, even as powerful competition rears its head.

Related Link: Dan Nathan Sees Unusual Options Activity In GoPro

Consumer electronics powerhouse Sony Corp (ADR) SNE recently took a shot across GoPro's bow with the entry of its Sony Action Cam.

The well-respected global positioning system maker Garmin Ltd. GRMN and Taiwan electronics maker HTC Corp. have each launched products directly competing with GoPro, while Samsung Electronics is mentioned as likely to soon enter the market.

Among 15 analysts tracked by FactSet, 10 currently rate GoPro at Hold, one at Sell and four maintain Buy ratings.

Among the minority, Wedbush 's Michael Pachter reiterated a Buy rating on GoPro, citing strong holiday sales of the company's products.

Some analysts have suggested the market for action cams is limited and easily saturated.

But GoPro aims to boost its fortunes by becoming a media company.

GoPro is actively "curating" content through its GoPro Network, which includes channels on Facebook, Instagram, Twitter, Pinterest, Virgin America, Xbox 360, Xbox One and YouTube.