GoPro Inc (GPRO) is known for exciting videos shot with its durable cameras strapped to hang gliders, surfboards and other sports gear. But sadly, GPRO stock holders don’t really need to watch a YouTube video of someone base jumping to get a rush of adrenaline.
That’s because the wild ride since GoPro went public has seen GPRO stock dive back below its initial offer price of $24, despite at one time logging a 250% gain from that same mark.
The million dollar question, of course, is whether GPRO is finally bottoming, or whether more pain is in order.
A look at the charts and recent sentiment doesn’t look good, however, and it’s most likely that things will get worse before they get better for GoPro stock.
GoPro Stock Sentiment Is Ugly
GPRO lost 25% in the last month alone as sentiment deteriorated before the company’s third-quarter earnings report. The momentum stock plumbed new all-time lows and is well below both its short- and long-term moving averages.
A fast-moving stock like this will have a hard time reversing that trend.
Besides, what could spark a bunch of bullish sentiment in GoPro stock now? An ugly report validated earnings fears about GPRO as the camera maker missed expectations by a long shot. (GPRO saw earnings per share of just 25 cents vs. forecasts of 29 cents, and revenue of $400 million vs. forecast of $434 million.)
Wall Street analysts certainly see the writing on the wall. Morgan stanley reduced its price target on GoPro stock from $62 to $35 after earnings, and more recently Piper Jaffray cut its target by 54% to just $25 from $54 previously.
There is nothing good about any of this.
But bulls are quick to point out GoPro’s dip in revenue from the Americas was offset by international growth that nearly tripled to almost $210 million — which actually puts overseas sales ahead of its domestic segment now. That, coupled with expanding gross margins, is reason to think GPRO stock shouldn’t be left for dead.
And, I suppose, the massive surge in GoPro short interest could be seen as dry powder for a big move on a potential short squeeze … but that seems like whistling past the graveyard, given all the very good reasons investors have to be short GPRO stock now.
Bottom Line on GoPro Stock
Look, the line of Hero cameras put out by this consumer tech company are indeed good products. But it’s not like GPRO has a monopoly.
Apple’s (AAPL) iPhone 6s has a whole marketing campaign centered around the quality of its photos and videos, with the tag of “shot on iPhone 6″ showcasing the range and quality of its devices. There’s also a high-end 41-megapixel smartphone (yes, that’s “forty-one”) from Microsoft (MSFT) partner Nokia (NOK) for those who want professional-grade resolution in their pocket.
And yes, GoPro stock is actually pretty fairly valued now after the flow, with a forward price-to-earnings of about 15. But plenty of stocks with nosebleed multiples keep moving higher while companies with single-digit earnings multiples continue flopping.
Given the negative sentiment and the very clear downtrend, banking on a rebound in GoPro is a dangerous proposition.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
