GoPro Inc. (GPRO) shares plunged 5.24% in pre-market trading on Tuesday, despite Morgan Stanley raising its price target for the action camera maker. The significant drop comes as the investment bank maintained its Sell rating on the stock, citing ongoing revenue challenges and competitive pressures.

Morgan Stanley analyst Erik Woodring increased the price target for GoPro from $0.30 to $0.50, but this optimism was overshadowed by concerns about the company's fundamental issues. Woodring highlighted weak consumer sentiment and intensifying competition as key factors hindering GoPro's growth prospects. These challenges are expected to continue impacting the company's revenue stream, raising doubts about its ability to navigate the current market landscape effectively.

The contradictory signals of a raised price target alongside a maintained Sell rating have likely contributed to investor uncertainty. While the higher price target suggests some improvement in GoPro's outlook, the persistent Sell recommendation underscores the analyst's belief that the company still faces significant hurdles. This ambivalence, combined with the broader market's focus on the underlying revenue challenges, appears to have triggered the sharp sell-off in GoPro's stock during pre-market trading.