GoPro Inc: Can GPRO Stock Take Flight?

Advertisement

GPRO stock - GoPro Inc: Can GPRO Stock Take Flight?

Source: GoPro>

Action camera maker GoPro Inc (GPRO) was a momentum sweetheart after IPO’ing back in the summer of 2014. It ticked a lot of boxes for investors.

GoPro Inc: Can GPRO Stock Take Flight?It was a pioneer in a new consumer electronics product segment. It had pizazz with its association with extreme sports. And it directly fed into the social media obsession by enabling — through easy-to-use hardware and software — the creation of slick, POV videos to humblebrag with.

After quadrupling, GPRO stock entered a long decline that resulted in a 90%-plus drop from its high into the low set in May. A combination of limited adoption, quick-to-ramp competition and a big product misfire with the Hero4 Session camera and resulting inventory writeoffs were all drivers.

gpro_chart_072916

But hope springs anew after better-than-expected quarterly results were reported this week ahead of hugely important product launches later this year: Both a new action camera and an eagerly awaited video drone entry.

Shares look ready to break up and out of a year-to-date consolidation range with overhead resistance near $14. This would also coincide with a break up and over the 200-day moving average, something that hasn’t happened since last summer.

GPRO Stock Earnings

For the second quarter, GoPro reported a smaller-than-expected loss of 52 cents per share vs. the 57-cent loss estimate. Revenues totaled $220.8 million vs. the $194 million expected. Positive forward guidance was also reaffirmed as the company looks to return to profitability in the fourth quarter. The results are a legacy of what analyst at Dougherty Markets label a “stale” product portfolio.

The disappointment in GPRO stock has created attractive valuation levels, with shares trading at less than 1x enterprise value per share.

Much depends on how the market responds to the unveiling of the Hero5 camera and the Karma drone. The latter, which has been teased with no specifics yet, is expected to cost around $2,000.

drone-form

The sleuths over at Patent Yogi suggest the Karma could be a self-contained form factor resembling the patent illustration above, filed by the GoPro’s head engineer on the project.

An alternate version of the form factor is the cylindrical illustration shown below, complete with lanyard.

gopro-lanyard

What’s cool about this idea is that it’s easily portable, with the quad-rotors and arms folding into the main body of the drone — eschewing the big, bulking backpack necessary to carry the DJI Phantom around safely and totally fitting with the company’s image as a maker of tough, high-quality, easily carried products.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/07/gpro-stock-karma-gopro-flight/.

©2024 InvestorPlace Media, LLC