GoPro's (GPRO) Q2 results showed the continued headwinds that the company is facing including memory costs, elasticity on higher prices, and competition, Morgan Stanley said in a note Tuesday.

GoPro's revenue fell more than 30% year on year as sell-through declined nearly 40% year on year due to a "multitude of macro and micro factors," the note said.

Morgan Stanley highlighted the fact that GoPro's gross margins were 30% as reported, but only 12% if tariff refunds are excluded as "memory inflation continues to negatively impact profitability."

The investment firm said GoPro's strategic review is "critical in dictating [the] path forward." The review is in the "later innings of the process and inquiries have been fielded by consumer, defense and financial services companies," the note said.

Morgan Stanley reiterated GoPro's underweight rating and cut the company's price target to $0.50 from $1.30, citing lower revenue and profitability estimates.

GoPro shares were down past 12% in Tuesday trading.

Price: 0.61, Change: -0.09, Percent Change: -12.87