What In The World Happened To GoPro?
Estimize | Jul 27, 2016 09:24AM ET
GoPro Inc (NASDAQ:GPRO) Information Technology – Computers and Peripherals| Reports July 19, After Market Closes
Key Takeaways
- The Estimize consensus is looking for a loss of 57 cents per share on $210.46 million, right in line with Wall Street
- Demand for action cameras is hitting an all time low as the market reaches its saturation point
- GoPro shares are down 75% in the past 12 months and should continue to flounder as growth declines
- What are you expecting for GPRO ?
Shares of GoPro jumped over 13% early last week despite any company related news. Rather it was the hit mobile app Pokemon Go and the excitement surrounding AR/VR technology that pushed shares higher. GoPro has been one of the most beaten down tech stocks since its IPO 2 years ago.
Its troubles extend each and every quarter as growth continues to reach new lows. Investors are hopeful that the beleaguered action camera maker can turn it around things around with strong Q2 earnings this Tuesday. However, early indications suggest shareholders shouldn’t get their hopes up.
The Estimize consensus is looking for a loss of 57 cents per share on $210.46 million, right in line with Wall Street. Compared to a year earlier this represents a resounding 256% decline on the bottom line and 49% on the top. Estimates have seen heavy downward revisions over the past 3 months, typically a sign that a weak report is in on the way.
The market for action cameras has changed dramatically in a very short time . GoPro’s core products were in vogue at the time of its IPO but have now become an afterthought to today’s best technology. Consequently, growth has significantly decelerated over the past 8 quarters, turning negative in Q4 2015.
In fact, last quarter saw earnings dip -363% with sales close behind at -50%. Its most recent product, the Hero4, has been largely disappointing, continuing to miss sales forecast since its debut. In fact, GoPro was forced to cut the price of its newest camera in half in order to drive sales.
Investors are hopeful new products and a potential transition to AR/VR technology can jumpstart shares. GoPro expects to launch its Hero5 and Karma drone later this quarter which will feature upgraded video resolution.
It won’t be surprising if both products fall flat given the market is reaching saturation. XIaomi and Sony Corp (NYSE:SNE) have effectively closed the gap with GoPro by offering similar products at a fraction of the price.
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Since action camera’s aren’t particularly an important or necessary device, it’s easy to see why consumers would opt for a cheaper one. Until GoPro breaks ground in AR/VR technology, which is what this most recent pop might be indicating, then don’t expect things to change anytime soon.
Do you think GPRO can beat estimates?
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