Surprise, surprise. GoPro Inc (GPRO) stock closed 10% lower on Thursday. The dismal performance of the stock that was once one of Wall Street’s highest fliers is becoming hard to watch, and the fact that a competitor is planning a compelling action camera offering of its own is no help.
Shares of GPRO stock are now off 30% in the last five trading days, 51% year-to-date, and 82% over the last year. And the decline could hasten if the newest offering from LG, which actually sounds really cool, ends up being a hit with consumers.
While early details on the GoPro competitor are scarce, the bottom line is this is another cook in the kitchen — and GPRO stock clearly can’t take the heat.
Don’t Bargain Hunt in GPRO Stock
I made the mistake of being a happy-go-lucky GPRO optimist for much of last year … this was a mistake that earned a spot on my “Worst Calls of 2015” list (to err is human, after all). I refuse to make that mistake again in 2016.
The most recent major news surrounding GPRO stock is that the company is delaying its heavily hyped Karma drone until later in the year, an objectively not good announcement. Karma was supposed to provide a much-needed lift to GoPro when it debuted in Q2, an event investors had reason to be stoked about given the 49% year-over-year decline in revenue in Q1.
The newly announced LG Action CAM LTE only compounds the laundry list of concerns swirling around GoPro. The LG camera will be able to livestream footage to the web without using Wi-Fi, it has motion sensors and GPS and it’s frickin’ waterproof (albeit to only one meter for 30 minutes, but cry me a river).
The LG camera is perfectly emblematic of the broader issue plaguing GPRO stock today: GoPro chose an industry that became instantly commoditized. LG, Garmin Ltd. (GRMN), Sony Corp (ADR) (SNE), TomTom NV (TMOAF), Xiaomi, DJI and even Polaroid have each invaded the space with the gusto of a bloodthirsty Mongolian army.
That’s a big reason why GoPro feels expanding its product lines is so important to the company’s future. That sentiment is wholly understandable, but the delay of the Karma drone could cost GoPro its first-mover advantage.
We’re already seeing consumer-facing drones like the Hover from Zero Zero Robotics, which can spring into action when you throw it up in the air. With a summer 2016 launch date and a rumored $600 price range, the Hover and offerings like it could ground the Karma — and GPRO stock owners — before the delayed quadcopter even sees the light of day.
I don’t like the way GoPro is executing at all; it comes off as a viscerally uninspired company, and unless GoPro can pull off a comeback to rival that of Apple Inc.‘s (AAPL) comeback in the late ’90s and early aughts, I fear shareholders will have nothing to celebrate for some time.
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.
