While the latest earnings report for GoPro Inc (NASDAQ:GPRO) was encouraging, it was not enough to put GPRO stock into gear. Then again, the company faces some tough challenges that are likely to persist for quite some time.
First of all, the competitive environment for its action cameras continues to get more intense.
But of course, smartphones are also taking away market share since these devices are getting much more sophisticated. For example, during WWDC, Apple Inc. (NASDAQ:AAPL) announced its ARKit for iOS 11, which allows for augmented reality (AR) features. Furthermore, with the upcoming launch of the iPhone 8, there should be some other whiz-bang features.
It also not encouraging for GPRO stock that the company is essentially focused on an industry that is a niche. How many people really need a camera for their sports activities?
Now it’s true that GoPro has taken steps to diversify its product offerings, such as with the Karma drone. But even this has come under lots of pressure lately as seen with the recent launch of the DJI Spark, which has a competitive price tag of $499. It’s a folding drone that has a smaller form factor and is more portable — that is, when compared to the Karma.
The max speed is 31 MHP and the range of 1.2 miles. What’s more, you can control the drone with either an Apple or Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) device. There’s also a new app, called DJI Go, that allows for video editing and sharing.
According to InvestorPlace.com’s Brad Moon:
“The DJI Spark puts the Chinese drone maker in a position to dominate not only the high end of the drone market, but also the middle as well — making it even more difficult for a product like the GoPro Karma to succeed.”
OK, but what about GPRO’s moves into virtual reality (VR)? Might this be a catalyst? Well, the company’s offering, which is called GoPro Fusion, is not expected to hit the markets until later in the year — and it will be only for “limited” commercial release. In the meantime, there is definitely no shortage of VR products coming onto the market, such as from Facebook Inc (NASDAQ:FB) and Garmin.
The Real Problem for GPRO Stock
Given all this, it should be no surprise that GPRO stock has been such a major loser. But unfortunately, there is something else that could drive the valuation even lower — that is, the company’s problems with product development.