Top wearable camera developer GoPro, Inc. (NYSE:GPRO) has been one of the worst performing stocks of 2015. Having already tanked 71% this year, GPRO stock is now trading under its initial public offering (IPO) price. Bears have long cited the company to be a “one trick pony,” but GoPro’s CEO, Nick Woodman, may now have something up his sleeves to prove them wrong. Here’s how GoPro might be able to diversify its product lines in the coming year.
Although I’m a fan of its quality cameras, there’s no denying the fact that GoPro may be losing its touch now, the reason being the ongoing commoditization of its cameras at the hands of cheaper Chinese alternatives. But these two new impending launches make me hopeful that the good days aren’t over for GoPro stock.
1. 360-Degree Video Cameras
GoPro has recently launched its 360-degree video camera—finally a move in the right direction. The 360-degree camera is obviously not the first of its kind, but it’s certainly one of the best. The GoPro “Odyssey” camera shoots panoramic 360-degree videos and is a big leap for the world of virtual reality, where all big tech giants are now heavily investing.
One way these cameras could prove a boon to GoPro is through partnerships with the likes of Facebook, Inc. and Google’s Alphabet Inc. Facebook has finally launched the 360-degree videos on “iOS;” they were previously only available on “Android”-supported devices and online. Earlier this year, Google also launched 360-degree videos on YouTube.
It’s important to note that with both Facebook and Google make the biggest chunk of their revenue from ad dollars, the company’s are going to make the shift to 360-degree video ads. Facebook has already started testing these video ads with big companies like AT&T, Samsung, Walt Disney, and Nescafe. Google will likely follow suit. If GoPro is able to find a way to become the biggest supplier to 360-degree video advertisers, the venture could open up the biggest treasure trove for the company.
2. Drone Cameras
The company’s second big project underway is GoPro’s flying quadcopter camera. The market for flying drone cameras is still raw, but the industry is fast gaining interest from both the public defense industry and the private consumer market.
GoPro has recently released a test video of its quadcopter prototype and the video is absolutely breathtaking. (Source: “GoPro: Sneak Peek of GoPro Quadcopter Footage,” GoPro YouTube channel, uploaded October 28, 2015.) Although, the video slightly lacks in quality and the quadcopter apparently lacks in flight height when compared to the famous DJI drones—“DJI Inspire 1” and “DJI Inspire 2”—rest assured that the final product will deliver both on quality and performance. At least, that’s what sets GoPro apart from most low-end Chinese substitutes, so it’s unlikely to be any different with the company’s upcoming products.
Demand for flying cameras is on the rise, as aerial photography and videography becomes popular for weddings and high-end social events coverage, in addition to news broadcasting in war-torn and difficult-to-reach areas. GoPro stands to win big should it be able to land supply contracts with big broadcasters, something the company’s management should definitely consider.
The ultimate bane of its success has been its sole reliance on wearable cameras and its failure to have an authentic and targeted marketing campaign in place. An average enthusiast begins their search on Google, where GoPro misses out on the opportunity to connect with prospective buyers. As the management rightly acknowledged in its latest call with investors, an underfunded marketing campaign has been the major reason behind sluggish sales.
Go ahead and do a quick lookup on any popular search engine of “wearable cameras,” “360-degree cameras,” and “drone cameras,” and you’ll see that the results confirm this. Management must come to its senses and do something about this before it’s too late.
The Bottom Line on GPRO Stock
GoPro is still financially sound with a strong cash position and a clean balance sheet with no debt. The company has been delivering growth on both top- and bottom-line numbers and cash flows are also looking healthy. Additionally, management has stepped up research and development and the two new products in the pipeline make me hopeful on a turnaround.
In a nutshell, GPRO stock looks cheap at current levels.