Can Hero+ Save GoPro, Inc. (NASDAQ:GPRO)?

GoPro Hero+Durable Camera Maker GoPro, Inc. Tries to Shore Up Sales

Can a strategic new product save the GoPro, Inc. (NASDAQ:GPRO) stock price from plummeting any lower?

GoPro sure thinks so. With the upcoming launch of its budget durable camera, the GoPro Hero+ is set to go on sale in October. (Source: The Wall Street Journal, last accessed September 28, 2015.) Retailing at $199.00 and boasting full Wi-Fi and Bluetooth capabilities, GoPro is banking on the value of its new product to significantly boost sales ahead of the holiday shopping season.

Sliding neatly between GoPro’s basic camera at $130.00 and the more upscale Hero4 $299.00 version, the Hero+ is meant to appeal to those who aspire to the latter while still being budget-conscious.

Here’s Why GoPro Stock is Slumping

This latest move can’t hide one simple fact: GoPro sales are slumping, and the company’s stock price reflects that. (Source: CNN, last accessed September 28, 2015.)

Those analysts who likened GoPro’s latest decline to BlackBerry Inc, another tech heavyweight that was unable to live up to its hype and crashed, may be proven right. (Source: CNBC, last accessed September 28, 2015.)

Investors seem to agree with that pessimistic view, with GoPro stock sliding by more than 7.5% in Monday afternoon trading. GoPro stock is now sitting at its lowest point since June 2014, seemingly about to flirt with its 2014 IPO price of $24.00.

GPRO_28_Seprt_15_Chart

Chart courtesy of www.StockCharts.com

Now, the move towards putting out a budget-friendly camera with all of the features techies want is of course a step in the right direction. GoPro has gone without an adequate entry-level camera for some time, as its basic version does not have Wi-Fi connectivity, something that consumers have identified as a key desired feature. As a result, GoPro has struggled to outsell higher-priced entry-level cameras.

However, this new Hero+ seems set to cover all the bases, along with all of the legendary durability, mounting capabilities, and waterproof characteristics of the brand.

The reduction in price of the top-level model, the Hero4, should come as no surprise; GoPro management has been honest with the fact that sales have not lived up to their initial forecasts. (Source: Forbes, last accessed September 28, 2015.)

The camera was simply too expensive, and consumers like to vote with their wallets.

This, to a large degree, is the root cause of GoPro stock sliding further and further down in value.

Slumping sales are one part of the negative equation for GoPro, and competition is the other.

Is the rugged, “go-anywhere” digital camera maker set to repeat Blackberry’s slide into the financial abyss? Some analysts certainly think so.

Competition from other devices is growing daily. Smartphone manufacturers are making their built-in cameras better and better, which has in turn led to declining sales of the GoPro. (Source: The Wall Street Journal, last accessed September 22, 2015.) Apple and Android-based devices are in fact now the most direct threat to GoPro at the moment, as their improved cameras and ubiquitous use makes them hard to compete against.

But other failures have come up.

GoPro’s original business strategy was to not only manufacture durable high-quality cameras but also the media platform around them. (Source: Bloomberg, last accessed September 22, 2015.) Site traffic on the GoPro web site has in fact been dropping this year after peaking last December.

The result has been a continuous fall in the company’s value. The GPRO stock price may have dropped by about $50.00 since 2014.

Now, this is a serious nosedive, and you’re wondering how the GoPro stock price got here.

GoPro’s stock shot up by more than 30% at its IPO in June 2014 before hitting its peak of $98.00 in October 2014. The direction from there was nowhere but down, as GoPro is now under $30.00 a share.

Could GoPro then be only the latest in a series of one-hit wonder tech companies who could not maintain their massive growth? With the GPRO stock price seemingly about to collapse below its 2014 IPO price, and announcements of smart new products unable to convince investors of the value of the company, its future is looking increasingly more unstable.

Here’s the Bottom Line on GPRO Stock

These developments do not spell out a good future for the GoPro stock price, as analysts and traders alike seem to prefer a wait-and-see approach over risky investment. It’s for these reasons that I remain bearish on GoPro stock.

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