Good News for GPRO Stock
GoPro Inc (NASDAQ:GPRO) got a lift Wednesday morning after the company announced cost-cutting measures in its efforts to refocus the firm. However, GoPro stock (GPRO) had dropped lower by the very next day.
What’s going on with the action-camera maker and GPRO stock?
The headline news was that GoPro will cut 200 jobs, many of them in the company’s entertainment division. That section will be closed in the coming months. The company will also close all open positions and accept the resignation of President Tony Bates.
GoPro expects these changes to cost it $24.0 million to $33.0 million in the short run. That being said, the cuts could save GoPro $735.0 million worth of operating costs during 2017. Not only would that help boost GoPro stock’s bottom line, but it would recenter GoPro’s erratic business strategy.
At one point, CEO Nick Woodman wanted GoPro to become a media platform that generated content and distributed it. But those ambitions have proven too distant from GoPro’s core product. (Source: “GoPro Will Cut 15% of Workforce Amid Restructuring,” Fortune, November 30, 2016.)
Woodman seems to have reined in his ambition, choosing instead to make GoPro a miniature version of Apple Inc. (NASDAQ:AAPL). He has often said that GoPro is like Apple, but without “iTunes.” What he means is that the hardware product is solid, but there is no platform for sharing content.
To be clear, this is distinct from the entertainment side of things. Woodman has given up hope that GoPro should be in the media game, but he still thinks there needs to be an ecosystem for GoPro-style content. Not having this ecosystem is what hurt GoPro stock (GPRO) in recent years.
Woodman clearly thinks that cutting 15% of his workforce can help redirect cash to the right places and ultimately send GoPro stock (GPRO) surging. Perhaps that is why he simultaneously released new data that showed strong demand for GoPro’s new “Hero5” camera.
There was a 33% year-over-year increase between Black Friday and Cyber Monday.
“Consumer demand for GoPro is solid and we’ve sharply narrowed our focus to concentrate on our core business,” said Woodman. “We are headed into 2017 with a powerful global brand, our best ever products, and a clear roadmap for restored growth and profitability in 2017.” (Source: Ibid.)
GPRO stock is currently hovering at $9.85.
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