GoPro Inc: Is It Time to Give Up on GoPro Stock?

GoPro IncGoPro Stock Could Still Make a Comeback

Everyone knows that GoPro Inc (NASDAQ:GPRO) stock is not what it used to be. When the once-profitable action camera maker started reporting losses, investors ran away. However, with its expansion into some of the hottest fields in tech today, GoPro stock might not be over just yet.

Let me explain…

First up are drones. One of the reasons why so many people love drones is the video footage these devices can capture. Last year, GoPro announced that it’s making a drone named “Karma,” which, according to the company’s founder and CEO, Nick Woodman, will provide another “oh my God” moment. In December, the company released a video captured by the drone, and it looked quite impressive. (Source: “Karma is Coming in 2016,” GoPro Inc, December 8, 2015.)

Of course, GoPro’s drone has been delayed, and the stock market is not nice to companies with delayed product launches. However, given the significant role GoPro’s cameras have already been playing in the drone business, the company still has a chance to succeed once it releases the Karma.

Many drones used for recreation today are equipped with GoPro cameras.  Recently, though, a company in Europe has started to use GoPro for another purpose—fending off an invasive species.

Bee-killing Asian hornets have been spreading across Europe. They are believed to have arrived to the continent in a shipment of pottery over a decade ago. Recently, French drone-maker DroneVolt started working with bee experts and the French chemical company Landes to make a “Spray Hornet” drone. The drone is equipped with a tilting spray system and—you guessed it—a GoPro “Hero4 Black Edition HD” camera.

(Source: “New Drone Aims to Take Out Europe’s Killer-Hornets,” CNBC, June 15, 2016.)

Other than drones, GoPro is also moving into another hot field in tech—virtual reality (VR). But instead of going after content consumers with VR headsets, the company is targeting content creators.

Last year, GoPro released the “Odyssey”—a 16-camera spherical array that can capture 360-degree videos. The VR rig is quite pricy—at $15,000 apiece—and is only available to professional content creators.

Earlier this year, GoPro unveiled a less expensive 360-degree camera to consumers. For $4,999.99, you can get a synchronized six-camera spherical array called “Omni.” Sure, it’s still not cheap, but it’s one-third of what an Odyssey would cost. (Source: “GoPro to Showcase Full Suite of Professional Products at NAB 2016,” GoPro Inc, April 17, 2016.)

Also, GoPro recently announced that it has formed an exclusive global partnership with Red Bull GmbH. According to the agreement, GoPro will become the official point-of-view camera provider for Red Bull’s events and videos. (Source: “GoPro and Red Bull Form Exclusive Global Partnership,” GoPro Inc, May 24, 2016.)

The partnership would give GoPro’s product and brand access to over 1,800 Red Bull events across more than 100 countries. The two companies would share content rights on co-productions, and the content would be distributed across both GoPro and Red Bull’s digital distribution networks. In return, Red Bull would get less than one percent equity in GoPro.

The announcement shouldn’t really come as that much of a surprise because the two companies couldn’t be a more perfect match. Red Bull is a major sponsor of auto racing, skateboarding, BMX, and other sports. Athletes in these sports already love to use GoPro’s action cameras.

Last but not least, going forward, GoPro’s action camera business might turn out better than what the stock market is expecting. One of its suppliers, Ambarella Inc (NASDAQ:AMBA), said in its earnings conference call that “we’re expecting the wearable market to return to somewhat normal levels in the second half.” (Source: “Ambarella CEO Dr. Fermi Wang on Q1 2017 Results – Earnings Call Transcript,” Seeking Alpha, June 2, 2016.)

The Bottom Line on GPRO Stock

As much as those things could become catalysts, let’s not forget what kind of situation GoPro stock is in right now. It took an 83.3% drop for GPRO stock to go from $60.00 a share to $10.00 a share. But if it were to go back from $10.00 to $60.00 apiece, it would need a 500% rise.

Don’t get me wrong; GoPro stock is far from over. However, until I see the company’s new products and how the market receives them, I’ll be standing on the sidelines.