Downturn in GPRO Stock is an Opportunity
GoPro, Inc.’s (NASDAQ:GPRO) cameras are marketed towards those with adventurous lives. And if the company’s recent share price movements are any indication, GoPro stockholders seem to hold the same sentiments.
GoPro has certainly taken a beating in market movements this year, with the GPRO stock price dropping by more than 50% since August alone. One might even be forgiven for jumping to the conclusion that this is the time to throw in the towel and give up on the company.
But this would be ignoring GoPro stock’s strong value and high upside potential, not to mention passing up the chance to buy a solid stock pick when it has found its bottom.
GoPro’s ongoing drama is not in itself a rarity for tech growth stocks. This latest GPRO stock price drop should be approached as just another step in the company’s growth trajectory.
With GoPro’s stock valuation now reduced to a more manageable level compared to its pre-summer highs, it’s now time to take a sober look at this manufacturer of action-adventure cameras and show exactly why I remain bullish on its medium- to long-term health.
GoPro Makes Excellent Products and Has Strong Brand Value
GoPro’s cameras are fantastic and durable, producing high-quality videos and pictures worthy of both personal and professional activities, and it achieves this with products that are completely affordable for the average person. The company’s cameras are well-integrated with other mobile devices and GoPro provides the tools to manage, share, and edit media content through GoPro Studio and its GoPro app.
But the company has another value: its name.
There is an instantaneous association made between GoPro’s name and its cameras. The company’s name is essentially now synonymous with action-adventure cameras, to the point where you don’t simply want a durable all-weather camera for your adventures; you want a GoPro. This is a critical aspect of consumer behavior which is ignored surprisingly often by analysts, yet remains a fundamental element in the success of many new tech companies.
Additionally, because of its position at the top of the action-adventure camera market, GoPro can easily command a premium price for its products.
GoPro Has Extremely High Growth Potential
Many people forget that GoPro’s platform is flexible enough to be shifted into other various growth categories. Through a mix of international developments and external acquisitions, the company is able to quickly branch out into other emerging niches if the opportunity presents itself. GoPro, for example, recently purchased Kolor, a media editing platform which allows for technologically advanced video stitching software to bind GoPro videos into 360 degree experiences. (Source: “Can GoPro Fend Off Competition And Restore Investor Confidence In GoPro Stock?” AmigoBulls, October 28, 2015.)
But it doesn’t stop there, because GoPro has plans to expand into the drone-based camera market. The company is planning to release the GoPro Quadcopter in early 2016, which will allow users to commandeer a flying drone with full GoPro camera capabilities for aerial shots and videos. (Source: GoPro: “This Camera Maker Needs a Hero,” Wall Street Journal, October 28, 2015.)
Most promising of all for the GPRO stock price is that the company remains committed to launching its own media-editing platform which integrates social media into the experience. What GoPro is doing is not only striving to become the undisputed leader in terms of durable camera manufacturing, but to become a media operator. While this may sound far-fetched, the company has poured considerable resources into incentivizing user-generated content, and has an evolving ambitious monetization framework for users to contribute.
GoPro Stock is Undervalued
A quick glance at GoPro’s stock price movements would have any shareholder or potential investor worried, if that’s all the information they had available. But this obscures a much bigger picture. The recent GPRO stock price nosedive has actually brought the shares down to a more reasonable level, with the company’s forward share price to earnings ratio sitting at 14:1. Compare this to other up-and-coming tech stocks such as Fitbit, with a very harsh share price to earnings ratio of 38:1.
Translation: GoPro is a highly profitable company, and it has the financial footing to prove it.
The Bottom Line on GoPro Stock
With the GPRO stock price currently sitting at a low level, it has never been a better time for a savvy investor to take a second look at this soon-to-be rising tech company. If the current low stock price continues, more and more investor curiosity will ferment. GoPro has very high brand value, a solid growth-oriented business strategy, and is on good financial footing.
With the holiday shopping season just around the corner and several new competitively priced products hitting markets, the GoPro stock price could be set to soar.
Stay in the loop. Follow Peter on Facebook and Twitter.