GoPro Stock Is Ready to Fly Again
Starting last May, GoPro Inc (NASDAQ:GPRO) has been on a slow but steady recovery. GoPro stock continues to hover at a much lower price than its rather hedonistic $100.00-per-share peak in 2014.
But the recent launch of the company’s new “Karma” drone camera may help GoPro stock take off again. The basic premise for investing in GoPro has not changed, despite the 2015-2016 crash.
GoPro has virtually created a sector, rapidly moving higher than its competitors for the rather simple reason that there simply wasn’t a contest in the beginning. Nobody could compete with GoPro when it introduced the first dedicated “action” camera, the GoPro “Hero 35mm” back in 2004. In 2014, GoPro stock soared after its initial public offering (IPO). Yet in November 2015, the share price fell below the IPO price.
GoPro shares have yet to recover; it is not even trading at its IPO level. Still, there is lift. GoPro stock has gained 56% in the past three months in expectation of the Karma launch. It is a testament to the fact GoPro is on a profitable track, although the company’s first serious competitors, such as Xiaomi, have arrived and broken GoPro’s almost monopolistic control of the market it invented.
GoPro Has Entered an Interesting Phase
GoPro shares are edging ever closer to hovering around the IPO—or pre-plummet—price levels of a few years ago. But, rather than focusing only on the share price, it’s worth remembering what makes GoPro unique, and why GPRO stock warrants consideration.
GPRO stock’s collapse is typical of companies that report profits below expectations. But that is not really GoPro’s case.
The company beat expectations in every quarter since the IPO in July 2014. It has missed expectations a few times, but to find a solution to this mystery, we must look to Ambarella Inc (NASDAQ:AMBA). Indeed, shares of Ambarella and GPRO have performed in reverse proportion to each other in 2016. Starting last February, AMBA shares picked up strong tailwinds, while GPRO dropped like a drone camera without power.
It so happens that Ambarella and GoPro are not competitors; they are complementary to each other. Ambarella creates chips for GoPro. So the performance of Ambarella should give an indication of how GoPro shares will be performing. Both GPRO and AMBA shares have been increasing in sync since last May. Prospects for AMBA stock remain bullish.
One of the great advantages of investing in GoPro is the relative lack of competition that still gives the American company an advantage. China has become an important market for GoPro, given the increasing sales, despite the fact that Xiaomi offers cheaper products. GoPro simply has the brand-name advantage over newcomers, thanks to the fact that before GoPro, the market was empty. This means that so much of the viral action content on web sites like “YouTube” generate free advertising for GoPro.
GoPro Gets Free Advertising from Popular GoPro Channel
Now the company will be hitting the media market directly with “GoPro Channel,” which is literally an online channel for GoPro users. It allows GoPro owners to upload professional and amateur videos.
This is a testament to the company’s success. In other words, GoPro has virtually invented a free promotional system that allows videos to become viral. It can count on over four million subscribers. The channel is expanding, thanks to amateurs and experts who are developing video content. In turn, this encourages existing users to upgrade their equipment and other people to become brand-new GoPro customers.
To speed up the rise in the channel’s user base, GoPro has launched an app that allows users to edit their own videos, while it is working on a cloud platform to back up videos, which should become operational shortly. (Source: “Cloud video editing could be GoPro’s real hero,” TechCrunch, September 16, 2016.)
GoPro is expanding more and more, and has a lot of potential to continue to expand and get better and better over the next few years.
Admittedly, GPRO stock may not suit all investors, given its recent volatility. But the past few months suggest that after the more hype-based shareholders were weeded out by the collapse between late 2015 and early 2016, the more serious connoisseur investors have stayed the course. Finally, GoPro is releasing the Karma drone to market on October 23, with a price of $800.00.
It’s small, foldable (it can be stored in a backpack), and features a stabilization system. It’s controlled via an intuitive touch screen and a joystick, and it even has an autopilot feature. In other words, this is the kind of toy to please many adults who are looking for a fun flying—as well as video-producing—out-of-the box experience.
At the listed price, the Karma has no competition and should be a hot seller for the forthcoming Christmas season. Black Friday sales figures will be a good indicator of GoPro’s performance. On paper, it looks like a winner from every angle, and it could account for the next major upside for GPRO stock.