GoPro Inc (GPRO) — While there’s no denying the lousy looking multiyear chart of GPRO stock, it has traced out a promising pattern on the daily chart that may surprise investors to the upside.
Investors’ initial lofty sales expectations for the action camera maker have clearly not (yet) been met, and this was reflected in the stock’s nearly one-way street lower since the October 2014 highs.
To be sure, GoPro faces an uphill battle to win investors back. But for the past year or so, there has been no shortage of takeover speculation involving a number of companies, including Apple Inc. (AAPL).
While no bid has yet surfaced, plenty of hedge fund managers are still betting on a buyout, which would almost certainly send shares soaring. And aside from a possible takeover, the next catalyst is the company’s earnings report, scheduled for May 5.
Given its short trading history, it seems somewhat silly to try to do any sort of long-term technical analysis on GPRO stock. But for the sake of perspective, it is worth taking a brief look at the weekly chart.
The stock went public in June 2014 and hype swiftly carried it to its October 2014 highs. From there, shares plummeted, and by October 2015, GPRO stock had dropped below its opening price from its first day of trading.
The daily chart below shows much more constrictive price action since early February. A strong rally on Feb. 16-17 confirmed the early February lows and allowed GPRO stock to fill its Jan. 14 down gap a few weeks later.
Shares then mostly trotted sideways until last week, when they rallied up to the early March highs and got rejected. Note, however, that horizontal resistance around the $14 mark lines up with the 100-day moving average. And over the past few days, GPRO stock has been consolidating below this resistance area.
Active investors and traders can look to buy GPRO stock on a break above $14.25 with an initial price target around the $16 mark, which could result in a 12% gain.
Like what you see? Sign up for the daily Beat the Bell e-letter and get Serge’s investment advice delivered to your inbox every morning! You can also download his 6 Keys for Successful Trading and Investing.
As of this writing, Serge did not hold a position in any of the aforementioned securities.
