When Should You Finally Buy GoPro Inc (GPRO) Stock?

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GoPro Inc (NASDAQ:GPRO) stock has been in an awful downward spiral since late last summer. Last August, GPRO was a $60 stock, but by Thursday, it had been reduced to below $10 per share.

While the company continues to struggle both from a product and a strategy perspective, GoPro stock’s fall beneath the $10 mark might trigger a psychological bargain for some investors and traders, which could lead to a tradable pop in the stock.

Beat the BellWhen GPRO announced its latest quarterly results on Wednesday after the close of trading, investors were greeted with some dismal news. The company announced fourth-quarter sales that missed analyst estimates by about 12%. While analysts were looking for Q4 sales of nearly $500 million, GoPro’s actual sales stood at $436 million.

Even worse was GPRO’s sales guidance for the first quarter, which now is in a range of $160 million to $180 million and drastically below analyst estimates of $300 million.

Plus, the company wildly mistimed its stock buybacks.

From where I sit, while GoPro is trying to sell an experience rather than a product, the fact is that the business model to a good extent still depends on customers eventually buying multiple cameras. That’s a challenging field, and it’s a niche market.

Plus, it doesn’t help that customers are complaining of too difficult a software for editing the videos and generally too long a process to upload videos.

The analyst community unfortunately has remained much too bullish on GoPro stock since the company came public, as analysts so often do with new initial public offerings.

GoPro Stock Charts

Looking at the chart of GPRO stock since the initial public offering in summer 2014, we see that as the initial post-IPO honeymoon phase wore off in fall 2014, the stock set in motion a vicious downtrend that remains in tact to this date.

In October 2015, GPRO stock gapped below its IPO price and again accelerated the downward motion until finally breaking below the $10 mark on Thursday. While this broader trend very much remains lower, from a momentum perspective we are once again seeing some positive divergence over the past few weeks, which is worth paying close attention to as it may lead to a bullish reversal in the stock in the near future.

To be clear, however, this has yet to take place.

GoPro stock since IPO
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Near- to medium-term direction of stocks very often has a large psychological aspect to it. Sometimes simple, round stock prices are enough to get a stock to go in a certain direction in the near-term.

On Thursday, GoPro stock dropped another nearly 9%, breaking and holding on a daily closing basis below the $10 mark. Judging my my Twitter feed and other proprietary investor sentiment readings, negativity on GPRO stock by the masses further spiked on Thursday. At the same time, I had a few discussions with hedge fund colleagues who are looking at Thursday’s price action in GPRO stock as a bounce opportunity.

GoPro stock daily
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From a technical perspective, GoPro stock on Thursday reached still deeper oversold readings, and if I couple that with the spike in investor negativity, a bounce could be near. Active investors and traders could look to buy the next bullish reversal that pushes the stock back above the $10 mark on a daily closing basis. The first upside target then becomes $11.50.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/gopro-inc-gpro-stock-10-may-provide-opportunity/.

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