GPRO Stock May Surprise Us in 2016
GoPro, Inc. (NASDAQ:GPRO) is facing a massive sell-off, as bulls continue to abandon ship. The question now bothering the loyal GPRO stock investors is whether the stock will eventually crater to penny stock levels.
As GoPro’s wearable cameras started losing their charm, the company moved quickly to announce two new product offerings that marked a step in the right direction—“GoPro Odyssey” and “GoPro Karma.” The former is a 360-degree camera, while the latter is a drone camera. Both offerings were monumental in terms of next-generation technology being offered.
But, of course, as soon as the market realized the potential of these technologies, competition kicked in. A string of bad news particularly hit GPRO stock last week, when bigwigs in the camera industry revealed their GoPro substitutes.
What Does This Mean for GoPro Stock?
At the Consumer Electronics Show (CES 2016) this year, both virtual reality (VR) and drone industries received a significant boost, as countless big and small companies showcased their best technological concoctions. In the VR arena, Nikon revealed a high-end 360-degree camera that threatens GoPro’s Odyssey, while Kodak also revealed a similar 360-degree camera for the consumer market. (Source: “Nikon beats GoPro to market with KeyMission 360 action camera,” TechRepublic, January 6, 2016.)
Meanwhile, something similar was witnessed for the flying/drone camera market. A number of companies revealed their best bets on drone cameras and their variants, which many believe are a threat to GoPro’s soon-to-be-introduced Karma copter camera. (Source: “Lily, A Camera Drone That Automatically Follows You, Pulls In A Mountainous $34 Million In Pre-orders,” TechCrunch, January 8, 2016.)
Now, if you look at it through a bear’s monocle, it may seem like bad news for GoPro. However, if you take a step back and take a look from a neutral perspective, this could very well be good news.
For starters, none of these 360-degree cameras have made it to the market yet, granting GoPro’s Odyssey a head start in the industry. Secondly, their prices have not yet been announced, but they are expected to surpass Odyssey’s, which will bring forth the latter as a more affordable consumer camera for the mass market. Thirdly, GoPro’s hip appeal amongst millennials gives it an edge over these other brands, which, despite catering to the professional market of camera enthusiasts, drive less attraction from the growing population of the Instagram generation.
As for the flying cameras, little is known about these new companies that are still finding their way to the commercial market. GoPro, on the contrary, is already knee-deep in the consumer market and enjoys strong brand recognition.
The growing competition, instead, spells good news for the respective VR and drone industries. This is because the commercialization of these technologies would lend to their humongous growth in the coming years, with GoPro emerging as the leader of the pack.
This is probably why JPMorgan still sees value in this action-camera developer and continues to maintain an overweight rating on GPRO stock. (Source: “GoPro Inc (GPRO) Given “Overweight” Rating at JPMorgan Chase & Co.,” Beanstockd, January 6, 2016.)
The Bottom Line for GPRO Stock
GoPro still has room to regain its lost glory by pushing its product out there before competition gets stiffer. The early-mover will certainly get an edge over the rest.
Meanwhile, GoPro chief, Nick Woodman, faces the challenge to keep GoPro relevant in the industry, as competition gets stiffer. An investor’s advice for him would be to focus on building GoPro’s long-term reputation and to avoid another “Hero 4 Session”-like tragedy of mispricing its future products.
In a nutshell, it’s both too early and a little too callous to give up on this company yet, especially at these valuations. Instead, I think we’re nearing a bottom for GPRO stock at current lows.