GPRO Stock Taking the Right Steps to Grow Again
GoPro Inc (NASDAQ:GPRO) has lost more than four percent in the past five days—that’s the bad news. The good news is that GPRO stock dropped solely on Brexit concerns last Thursday and it has already started to recover. The stock gained as much as 2.64% to close at $10.48 and is now worth almost $1.5 billion based on market cap. Is this the beginning of GoPro stock’s turnaround?
If you’ve been waiting for GoPro stock to find a bottom, you’ve already missed that train. In the past 52 weeks, GoPro stock touched a bottom of $8.62 per share. At its current price of $10.83 per share, it’s already some 20% higher and at that price, GoPro stock is still suffering from the Brexit-related sell-off. GoPro could easily bounce back to the mid-$11.00/share range in the short term. Indeed, analysts have set a $12.68 consensus price target for GoPro stock. The most optimistic analysts expect to see it trade at $21.00, while the average consensus rating stands at “Hold.” (Source: “GoPro (NASDAQ:GPRO) Analyst Rating Consensus,” Trade Calls, June 22, 2016.)
GoPro is focused on growth and using all possible avenues to achieve it. For example, GoPro is working with Ford Motor Company (NYSE:F) to expand its customer base, while keeping its brand name in the limelight through endorsement events and deals with athletes and celebrities. (Source: “GoPro (GPRO) Growth Plans on Track: Rebound in Cards?,” Zacks, June 24, 2016.)
With Ford, GoPro has launched an original content series called Unstoppable Life to capture and convey the essence of being a passionate athlete. This is a hint that GoPro is gradually becoming a full content developer. (Source: Ibid.)
As for hardware, GoPro is expanding its product lineup beyond the camera core. Just in time for the start of the big summer vacation season, a time for action activities like rock climbing, motorcycling, bicycling, or boating, GoPro has unveiled three new accessories, including special cases and backpacks that are weatherproof and easily portable. There are already on-the-market bags specifically designed to carry action-cameras, but they don’t have the GoPro brand on them. These are designed to work with the camera, allowing for quick access and storage of as many as five cameras. (Source: “GoPro releases backpack, plus bike-specific mounts for saddle rails, seatposts and handlebars,” Bike Radar, June 27, 2016.)
More importantly, GoPro is also acquiring new talent to churn out the new technology, software, and innovations it needs to compete. In early February, GoPro signed a patent licensing agreement with Microsoft Corporation (NASDAQ:MSFT) to acquire specific file storage and system technologies patents. (Source: Zacks, op cit.)
GoPro is also sponsoring major sporting events this summer to gain visibility including the Tour de France bicycle race and the top motorcycling racing franchise MotoGP. These things may appear to be minor, but in GoPro’s business, they are important steps for promoting the company’s wares and their practicality. To expand sales and earnings—and therefore boost GPRO stock—the company must continue to invest in marketing and promotion. (Source: Ibid.)
GoPro has endured a tough market for wearable cameras in the immediate period following its bombastic initial public offering (IPO) and even more flamboyant Wall Street post-IPO rally. This propelled GoPro stock to beyond $80.00 in October of 2014. Since then, GoPro has lost ground. There was little to sustain the stock’s price at that lofty level. Therefore, when the market for GoPro’s “Hero4 Session” camera started to saturate, revenue fell and the stock went down the chute. But this two-year slump has ended and there are concrete signs of a renaissance that should translate to a steady recovery for GoPro stock.
A recent report by JPMorgan shows that a silver lining may be just around the corner for GoPro, too. The company’s channel inventory may witness a lower-than-expected decline, signaling an uptick in demand for its products. Also, analysts at JPMorgan believe that the company’s marketing initiatives are reaping the desired results, as sales have been stabilizing over the past few months. An improved product lineup is adding to the bullishness over the company. (Source: Ibid.)
GoPro is shifting from a camera company to a software and entertainment company. This is the not-so-secret strategy that GoPro is using to boost its value in the long term. The strategy is working.