Short sellers love hardware companies, and unfortunately, GoPro Inc (NASDAQ:GPRO) stock falls into that category. Since it surged to more than $64.00 a share last summer, GoPro stock has plunged a staggering 82%.
GPRO Stock—A Short Seller Favorite
It’s easy to argue why a hardware company could fail. Unlike Internet companies whose performance often gets measured by monthly active users (MAUs), a hardware device maker has to convince consumers to buy its products in order to grow its userbase.
Look around and you’ll see stocks of defeated hardware companies scattered on the floor. BlackBerry Ltd (NASDAQ:BBRY) would be the perfect example. Back in its heyday, BBRY stock was trading at over $230.00 per share. Then it lost the smartphone battle to Apple Inc. (NASDAQ:AAPL). Where is the stock at today? Just above seven bucks. That’s a 97% decline!
The thing is, GoPro is yet to be defeated. In fact, its action cameras are still the go-to choice for those who want to document their active lifestyles. Of course, not everyone is interested in parachuting or wingsuit flying. In other words, GoPro has been making a niche product. This makes investors concerned of whether there is any growth left in GoPro’s core business.
Luckily, the company is expanding its presence. Instead of just working on action cameras, GoPro is moving into the two hottest fields in tech today—virtual reality (VR) and drones.
With the virtual reality industry on the rise, GoPro decided to make a product that could cater to VR content creators. Last year, it unveiled its 16-camera spherical array named “Odyssey.” The price is a bit steep at $15,000 and you have to be a professional content creator to be allowed to buy it. However, the company did say that it would make a more affordable version, which would be available to consumers and professionals.
GoPro kept its promise. At the NAB (National Association of Broadcasters) Show next week, the company is going to unveil its synchronized six-camera spherical array “Omni.” Footage captured by Omni’s six cameras can be combined into unified 6K spherical images using GoPro’s software, “Kolor.” (Source: “GoPro to Showcase Omni at NAB 2016,” GoPro Inc, April 7, 2016.)
At the same time, GoPro’s fans are looking forward to the company’s upcoming drone named “Karma.” GoPro founder and CEO Nick Woodman said last year that the drone camera would give people another “oh my God” moment. Since drones are now widely used in the film industry, GoPro’s expertise in cameras could make its upcoming drone an appealing choice to filmmakers.
And there’s more—even GoPro’s action camera business might get a boost in the next few years. According to Research and Markets, the global action camera market is expected to grow at a compound annual growth rate of 22.2% in the period of 2014 to 2019. (Source: “Global Action Camera Market 2015-2019,” Research and Markets, February 2015.)
The Bottom Line on GPRO Stock
By the end of March, over 24 million shares of GoPro stock were sold short. That represents more than 30% of the stock’s entire float. (Source: “Short Interest: Nasdaq Highlights,” The Wall Street Journal, last accessed April 12, 2016.)
Say what you want, but GPRO stock is far from over.