We all know that GoPro, Inc.’s (NASDAQ:GPRO) products are aimed at consumers with adventure-filled lifestyles. If the recent action in GPRO’s stock price is any indication, GoPro’s investors are just as risk-driven.
GoPro’s stock price has been dropping this year, with the company declining by more than 67% since August. Now, while your first thought might be to run away from GPRO stock—and fast—you might want to think again. Running away would mean ignoring GoPro’s clear value and extremely high upside growth potential.
Think of it this way: because GoPro’s stock price has slumped to a more manageable level currently in comparison to its summer price, now is the ideal time for a clever investor to take a second look at GoPro and perhaps seize the opportunity to watch a robust stock when it’s sitting on a bottom.
1. GoPro Has Solid Brand Value
GoPro’s durable action-adventure cameras are phenomenal. Consumers utilize them to produce high-quality videos and pictures for professional and personal use. However, beyond all that, GoPro manages to continue delivering durable, quality products while maintaining reasonable prices. The company’s action-adventure cameras are also well-integrated with a variety of other devices, including GoPro Studio software to edit, manage, and share user-generated content.
But the company’s value doesn’t stop there. GoPro’s brand name is the company’s prime asset.
It’s no secret that GoPro’s name immediately conjures up a connection between its cameras and the adventurous lifestyles users lead. GoPro’s name is virtually synonymous with high-quality action-adventure media; so much so, in fact, that a consumer doesn’t simply just want a camera for recording adventures, they want a GoPro. This is a critically important factor in appealing to consumers that sometimes gets ignored by industry analysts, but is still a pivotal element of a tech firm’s success.
2. GoPro Has Big Growth Potential
Investors and analysts alike appear to be forgetting that GoPro’s business model is flexible, as it can evolve and be applied to other types of tech-oriented growth categories. If GoPro can successfully apply a mix of acquiring smaller companies and continued growth on the back of international developments, the company could likely expand into sectors previously unimagined.
A good example would be Kolor, which GoPro recently bought out. It is a media editing software company that utilizes advanced video-stitching technology to weave together different GoPro videos into 360-degree videos. (Source: “Can GoPro Fend Off Competition And Restore Investor Confidence In GoPro Stock?” AmigoBulls, October 28, 2015.)
If you thought that was a one-time example of the company’s innovation, then think again. GoPro has announced its plans for expanding into the aerial drone business. The GoPro “Quadcopter” is scheduled for release early next year and will allow consumers to remotely fly a drone with an attached GoPro camera for aerial media shots. (Source: “GoPro: ‘This Camera Maker Needs a Hero’,” The Wall Street Journal, October 28, 2015.)
What impresses me most about GoPro and gives me hope for the GPRO stock price, however, is that this camera company is well on its way to developing its own media editing platform. This will have the effect of integrating social media into the entire GoPro experience. The company is not satisfied with being just the undisputed leader of durable cameras; instead, it intends to become a media operator along the way.
While this might sound outlandish and a tad abstract, take a look at the funds being poured into providing incentives for users generating content. Content creation by its users is a pivotal part of GoPro’s ambitious new business model.
3. GoPro Stock Is Undervalued
Taking a look at GPRO stock’s performance in the last few months would usually have anyone worried, but doing that would only give you part of the picture. A slumping GPRO stock price obscures a far larger development.
This recent nosedive in GPRO stock has pushed its share value down to a more reasonable level, with the company’s forward share price to earnings ratio sitting at a solid 14. Now, compare that to the other various rising tech sector stocks, such as Fitbit, Inc. (NYSE:FIT), which currently has a share price to earnings ratio of 37. If you’ve been paying attention, you know this is a very good indicator. GoPro remains an extremely profitable durable camera manufacturer and comes with the healthy balance sheet to back up that reality.
The Bottom Line on GPRO Stock
It appears that GoPro’s continuous stock price decline is not in and of itself much of a rarity for rising companies in the tech sector. This latest drop in GoPro’s stock price has to be contextualized as yet another period in the company’s overall expansion.
While GoPro’s stock price is certainly down right now, you might be surprised to know that there has never been a better chance to take a second look at a strong stock while it’s only temporarily at a bottom.
If you’re still skeptical, think of it in the following terms.
The longer the GPRO stock price sits at its bottom, the higher the interest we could be seeing from those investors who know a possible winner when they see one. GoPro stock could be paradoxically strengthened by rising brand value, a healthy growth-oriented strategy, and an excellent financial position. Top this all off with the fact that the holiday shopping season is about to kick off and GoPro’s growing selection of popular well-priced cameras could cause GPRO stock to soar.