GPRO Stock: Time to Bail on GoPro Inc?

GPRO StockNew Catalysts for GPRO Stock

GoPro Inc (NASDAQ:GPRO) has seen results that one might generously describe as half-baked. GoPro stock has lost value at a pace that defied the most optimistic expectations. A year ago, GoPro stock cost more than $60.00. Today, it’s worth $10.92.

The company is still around; it sells products that are probably the best in their class. GoPro is practically synonymous with the term “action camera.” The dichotomy between GoPro’s products and GoPro stock is as sharp as the picture they generate. The problem is growth potential. At their accessible prices, anyone who ever wanted an action camera already has one. This has limited GoPro’s growth, capping GoPro stock’s potential.

GoPro’s efforts to diversify its product line have suffered a few roadblocks, too. While appealing to the market with an ever-stronger design team—thanks to Apple designer Daniel Coster—GoPro has experienced delays launching new products. (Source: “GoPro Names Apple Designer Daniel Coster to Design Team,” The Wall Street Journal, April 16, 2016.) GoPro was supposed to launch its very own GoPro drone featuring integrated optics by the middle of 2016, but it hasn’t yet. (Source: “GoPro Camera Drone Will Be Released in 2016,” PetaPixel, May 28, 2015.) Given that GoPro’s most advanced camera costs approximately $400.00–$500.00, GoPro would be able to offer a turnkey purpose-built camera drone.

Now, GoPro has not lost its faith. The camera manufacturer remains confident. Indeed, not only is it banking on drones for expansion, as Charles “CJ” Prober, senior vice president of software and services at GoPro explains, GoPro is also going to exploit the growing demand for virtual reality. (Source: “GoPro needs a hero,” The Verge, June 2, 2016.)

GoPro is also developing video editing software. The company’s founder, Nick Woodman, says the new software will be “so fast and easy that you’ll get a rush, like a surfer riding the barrel of a wave, or a skateboarder stomping the perfect trick.” (Source: Ibid.) That could be one of the breakthrough products that, along with the drone, will help GoPro regain and increase its market share. That would be an ideal development to turn GoPro stock around, because the software will help it reach users who are still relying on smartphones for their action movies.

Speaking of smartphones, GoPro has suffered from the development of better phones. Smartphones have gotten so good that they’ve replaced a lot of cameras. Now, GoPro needs something extra to rekindle consumers’ lust for its products that propelled the company’s meteoric rise in 2013–2014, when GoPro stock rose to more than $80.00.

GoPro’s growth rate has since slowed and the company has acknowledged this. The problem is that everybody wants products to come out at a record pace now. Like many companies in the smartphone and electronics hardware sector, there is a multitude of competitive threats. GoPro must come up with solutions or products to reach out beyond its core customer. (Source: Ibid.)

Nevertheless, it seems the worst has come and passed. The San Mateo, California-based company is buoyant about its new products, which provide unprecedented diversification. Virtual reality is the natural progression for GoPro, according to Eric Abbruzzese, a senior analyst for ABI Research: “They’ve lost a lot of market share for their sports camera because smartphones have gotten so much better. If they could just replace them with a 360-degree camera, that could help them out a lot.” (Source: “Who Will Get Rich Selling Virtual Reality Cameras?Sci-Tech Today, June 3, 2016.)

GoPro, despite its spiraling share price, has not lost sight of its diversification goals. It invested in professional-grade cameras, editing software, and acquiring the French “spherical content” startup Kolor in 2015. (Source: Ibid.) Kolor makes professional high-end 360-degree cameras, such as the “Odyssey,” which sells for $15,000 and works with Google’s “Jump.” It will launch the lower-end “Omni” at a price tag of $4,999 later this summer. (Source: Ibid.)

In other words, GoPro has outlined its future and after a troublesome 2015, it will emerge as a new company in 2016, thanks to a transformation involving new products and software. It will no doubt face competition, but GoPro has a strong global distribution network. GoPro is not a startup. At the current price of about $10.00 per share, GoPro stock is at a bargain entry point, considering how the company is evolving.

Simply put, GoPro is still a market leader.