GoPro bankruptcy risk: There was a time when GoPro seemed unstoppable. The small action camera company that helped people capture everything from surfing adventures to skydiving videos became one of Wall Street's biggest success stories. At its peak in 2014, GoPro's market value climbed above $11 billion, its stock soared to record highs, and founder Nick Woodman briefly became the highest-paid CEO in America, as per a report.How GoPro Went From an $11 Billion Market Cap Giant to a Penny StockToday, the story looks very different.GoPro has warned investors that its future is uncertain after its auditor, PricewaterhouseCoopers (PwC), raised "substantial doubt" about the company's ability to continue operating over the next 12 months, as per a Moneywise report.The warning appeared in a newly refiled 2025 financial statement submitted to the SEC. PwC pointed to operating losses, negative cash flow, and debt obligations that could become due if certain financial conditions are not met.Investors reacted quickly. GoPro shares fell from $1.26 on Friday to around $1.10 on Monday and are continuing to trade near $1.10 on Wednesday morning.You Might Also Like:How Nick Woodman Built GoPro Into a Wall Street FavoriteGoPro's journey started with a simple idea.Founder Nick Woodman came up with the concept during a surfing trip to Australia and Indonesia in 2002 after strapping a 35mm camera to his wrist to capture footage in the water, as per the Moneywise report.To fund the business, he borrowed roughly $235,000 from his parents and sold bead-and-shell necklaces from a Volkswagen bus. The first GoPro camera sold for about $30.After two failed startup attempts, Woodman was determined to make his third venture succeed.You Might Also Like:That determination paid off.When GoPro went public in June 2014 at $24 per share, investors embraced the company's vision. The stock surged, eventually reaching a closing high of $93.85 later that year and pushing the company's valuation beyond $11 billion.What Went Wrong for GoProOver time, the challenges began to mount.Smartphone cameras improved dramatically, reducing the need for a separate action camera for many consumers. At the same time, lower-cost competitors increased pressure on the business.GoPro also struggled with diversification efforts.Its Karma drone project became one of the company's biggest setbacks. In 2016, GoPro recalled approximately 2,500 drones after reports that some units lost power during operation. The drone business was eventually discontinued in 2018, as per the Moneywise report.The company also reduced Woodman's cash compensation to $1 and cut more than 20% of its workforce.GoPro Revenue Declines as Losses Continue to GrowRecent financial results highlight the scale of the challenge.GoPro's revenue declined to $651.5 million in 2025, down from $801.5 million in 2024 and more than $1 billion in 2023.Hardware revenue dropped from $908 million in 2023 to $545 million last year.The company reported a loss of $93.5 million in 2025 and finished the year with just $49.7 million in cash, compared with $222.7 million two years earlier, as per the MoneyWise report.Why GoPro's Debt Obligations Are Becoming a Major RiskTo manage its financial position, GoPro has relied increasingly on lenders.The company secured a $50 million loan from Farallon Capital Management in August 2025 to help repay a convertible note. It later added another $50 million in convertible long-term debt earlier this year.The debt agreements include financial requirements that become more demanding over time, including liquidity targets and EBITDA goals.According to the filing, lenders could potentially view the auditor's going-concern warning itself as a default event.GoPro said it is currently in discussions with Farallon, Wells Fargo, and Yorkville regarding its financial situation, as per the report.AI-Driven Memory Chip Costs Create New Problems for GoProThe company is also dealing with rising component costs.GoPro cited sharp increases in memory-chip prices as AI data centers continue consuming large amounts of global supply.According to the filing, prices increased between 80% and 115% during the last week of March alone after suppliers reduced production.GoPro remains committed to purchasing approximately $24.5 million worth of memory components through non-cancelable agreements, as per the MoneyWise report.Can GoPro Avoid BankruptcyGoPro is exploring several possible paths forward.The company has hired investment bank Houlihan Lokey to evaluate a potential sale. It has also engaged advisors to explore opportunities in the defense and aerospace sector, noting that its cameras were used on the Artemis II Orion spacecraft.However, the company acknowledged that without additional financing or a strategic transaction, it may need to significantly reduce operations, restructure, cease operations, or seek bankruptcy protection.FAQsWhy is GoPro warning investors about its future?Its auditor said there is substantial doubt about the company's ability to continue operating over the next 12 months.Is GoPro going bankrupt?The company has not filed for bankruptcy, but it said bankruptcy protection is one possible outcome if it cannot secure additional financing or a strategic deal.