They say the definition of insanity is doing the same thing over and over again while expecting different results. By those standards, GoPro Inc (GPRO) CEO Nick Woodman is a raving lunatic. And loonies have no business running multibillion-dollar companies.
GoPro stock has been publicly traded for (almost) all of 20 months. Already, its journey has been more chock-full of drama than a made-for-TV Lifetime movie.
Unfortunately for GoPro investors, this is the part of the movie where the main character’s fatal flaw takes a turn for the worse due to hubris, shortsightedness and overall idiocy. Friends and supporters abandon the protagonist, who will never fully recover.
GoPro’s stock is plunging Thursday — shares plummeted as much as 14% in early trading — after a terrible, horrible, no good, very bad fourth quarter. Indeed, GPRO shares hit all-time lows Thursday morning.
With GoPro stock now down 90% from its all-time highs, Woodman has quickly proven his ineptitude and needs to be booted immediately.
GPRO Earnings: Too Painful to Watch
Going into Wednesday’s holiday earnings announcement, I reminded investors that we already knew the wearable camera company would have a horrible quarter. That’s because GoPro came out and warned Wall Street in mid-January, saying in a nutshell that the fourth quarter was miserable and nobody was buying the company’s once-hot products.
The GPRO stock price tanked 20% the day following that bleak Q4 warning. In some ways, I thought that was good: Investors built-in miserable expectations and effectively set the bar lower.
Apparently, it wasn’t set low enough.
Revenue came in at $436.6 million, down more than 31% year-over-year, but just above the $435 million GoPro projected in its press release from hell last month. But the real doozy were the earnings per share: GoPro stock posted a surprise loss of 8 cents per share. Analysts expected it to break even. Ouch.
Worst Guidance I’ve Ever Seen
Those numbers alone are bad enough to make grown men cry, but the most devastating part of Wednesday’s report was the guidance for the current quarter. I’ve been writing about stocks for four years and this by far is the single worst guidance I’ve seen.
GoPro expects revenue between $160 million and $180 million in the March quarter. At the midpoint of $170 million, that implies a revenue decline of 53% year-over-year. Before this nightmarish number came out, analysts were looking for GPRO to guide for revenue of $298 million.
Woodman, who can at times have the air of a slightly less repugnant Martin Shkreli, did something extremely audacious and absolutely maddening:
Owners of GoPro stock will from now on be left in the dark on what to expect in the coming quarter. That’s right, no more quarterly guidance. Only full-year guidance from now on. That prompted the following tweet from CNBC contributor Jeff Macke:
GoPro stops giving quarterly. Cites need for “Long-term perspective”. BC that’s their problem. Too much focus on performance $GPRO
— Jeff Macke (@JeffMacke) February 3, 2016
As founder of the company, there’s no doubt Woodman wants to stay. But his company is public now, so he doesn’t have the final say on that. Given what was arguably GoPro’s worst quarter ever, Woodman displayed what one analyst called “a complete lack of contrition and regret.” I have no confidence in Woodman’s ability to turn things around.
Folks, this is a man who skirted GoPro stock’s lockup period when GPRO was near all-time highs. This is a wannabe Shark Tank bro — indeed, Woodman has made cameos on the hit TV show — seemingly more interested in being mentioned in the same breath as Mark Cuban than in turning his maligned company around.
Woodman commissioned a 180-foot yacht in December, estimated to cost between $35 million and $40 million, then cut 100 jobs, or 7% of his workforce, less than a month later.
Although Woodman is planning some new product releases in 2016, there is zero reason to think GPRO is in any position to turn around. Not with him at the helm.
I don’t know how I overlooked him when I wrote about 10 CEOs that could be toast by 2017, but if I were writing it again today, he’d take every spot.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
