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GoPro's Stock Is Cheap for a Reason

It's hard to complain about many of the recent moves GoPro Inc. (GPRO) has made to stabilize sales and narrow its losses. But the end result of all this maneuvering could simply be to let the company carve out a niche as a provider of hardware for action sports, outdoors and drone enthusiasts, rather than a mass-market consumer electronics firm.

The good news: After dropping 27% in 2016 to $1.19 billion, GoPro's sales are rebounding a bit. Sales rose 19% annually in Q1 thanks to the late-2016 launch of GoPro's Hero5 camera line and foldable Karma drone, and Q2 sales guidance of $260 million to $280 million implies 22% growth at the midpoint.

Also: After years of aggressive spending growth driven by fantasies of becoming a consumer hardware and content giant, GoPro has gotten serious about cutting costs. Adjusted...