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GoPro, Inc. (GPRO) Buy or Sell Stock Guide

May 17, 2018


The analysis below may be helpful to you if you have any of the following questions about GPRO stock: •

Is GPRO a buy or a sell?

Should I sell or hold GPRO stock today?

Is GPRO a good buy / a good investment?

What are GPRO analyst opinions, recommendations, ratings?

Here are GPRO stock buy reasons/signals: 1. In September 2017, GoPro released the latest upgraded version of its wearable cameras – the HERO6. GoPro’s latest action camera is powered by GoPro's custom- designed GP1 processor. HERO6 boasts stunning 4K60 and 1080p240 video and the most advanced video stabilization ever achieved in a GoPro. 2. GoPro has been aiming towards transforming itself from the ‘camera maker’ to ‘content maker’, and has taken significant steps to diversify into higher-margin businesses including video editing and virtual reality. The company is developing various types of software solutions and hardware to curtail the complexity of managing, editing and sharing contents on different media platforms. The company has made significant improvements to its editing software, on the back of its recent acquisition of two of the most popular mobile editing apps, Replay (which has been rebranded as Quik) and Splice, which are experiencing robust adoption. 3. After some painful quarters of booking charges related toinventory write downs, the company has now eliminated entry-level products, and has a clean distribution channel. Further, last year, GoPro cut 15% of its total workforce as part of a broader, company-wide restructuring effort, which included shutting down its entertainment business to help channelize resources to more profitable areas. Again, the company is letting go of around 250 of its staff and will reducefounder and CEO Woodman’s salary to $1, in order to curtail operating expenses further. 4. GoPro is taking steps to solidify its position in the burgeoning virtual reality (VR) market. It recently announced additional software advancements with its new GoPro VR app. In fact, GoPro now offers one of the world's most comprehensive platforms for capturing, stitching, sharing and enjoying VR content, through its new VR capture rigs, Omni (a six-camera spherical rig for capturing content for VR) and Odyssey and stitching software, Kolor.


5. GPRO PEG ratio (P/E adjusted for growth) is 0.74, and it’s low compared to its industry peers’ PEG ratios.

Here are GPRO stock sell reasons/signals: 1. GoPro has huge international market exposure, and China remains one of the fastestgrowing regions for GoPro. However, amid the ongoing problems in the Chinese market, the company may face operational problems in the future. Additionally, GoPro’s supply chain partners have operations in several diverse countries like China, Brazil and the Netherlands. 2. The company is throwing in the towel on its drone business and is slashing 20% of its workforce after a sub-standard holiday quarter. Karma was facing mounting margin challenges in a tremendously competitive aerial market, which was dominated by the likes of DJI Technology and AeroVironment. A hostile regulatory environment in Europe and the United States further reduced Karma’s total addressable market and made its future untenable. 3. GoPro operates in a highly competitive cameras and camcorders market. The market has an extensive presence of well-known camera makers like Canon, Nikon and Olympus. Additionally, many electronics giants like Sony, Samsung and Panasonic have penetrated into capture devices market, thereby pushing the level of competition a notch higher. 4. GoPro reaps majority of its revenues from capture devices and, hence, faces a high product concentration risk. Moreover, the company has been witnessing huge competition between its new and old products. These persistent demand issues could drag down the company’s top line growth in coming times, even as it strives to expand its user base and find explore revenue streams. 5. In order to maintain its dominant market share, the company continues to spend a significant amount on research & development (R&D), which can put pressure on margins. Although the


company is utilizing R&D more efficiently, increasing competition has put the pricing under pressure, as evidenced by the company’s recent pricing actions. 6. GPRO quarterly revenue growth was -38.10%, lower than the industry and sector average revenue growth (-2.30% and 4.72%, respectively).

7. GPRO profitability is declining. The YoY profit margin change was -37.57pp.


8. GPRO average analyst price target ($5.63) is below its current price ($5.74).

9. GPRO short share of float is 31.22%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.


10. GPRO short interest (days to cover the shorts) ratio is 5.24. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on GPRO? If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

GoPro, Inc. (GPRO) Buy or Sell Stock Guide  

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GoPro, Inc. (GPRO) Buy or Sell Stock Guide  

Finstead Ultimate Stock Guides Review reasons to buy, hold or sell your favorite stocks before trading them!

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