Why GoPro Inc (GPRO) Stock Is Still Too Damaged to Bother

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GPRO stock - Why GoPro Inc (GPRO) Stock Is Still Too Damaged to Bother

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There’s no doubt about it, action camera maker GoPro Inc’s (NASDAQ:GPRO) products are cool. Their sleek design, crisp images and functionality make them must-have tech gear for extreme sports enthusiasts and want-to-have items for the casual videographer. However, making a popular product doesn’t mean the company will be a runaway success — and that’s exactly what happened to GPRO stock.

Why GoPro Inc (GPRO) Stock Is Still Too Damaged to Bother

Source: Shutterstock

GoPro action cameras had their time in the sun as did GPRO stock.

Investors initially flocked to the company after the tiny, square HD cameras became one of the hottest devices on the market. However, since that time, the company has done very little to plan for the future and GoPro stock has suffered the consequences. In the ever-changing tech space, you’ve got to be ahead of the curve and GoPro just hasn’t been able to grow its business by relying solely on cameras.

GoPro Stock: Winning With Drones?

There is definitely a market for drones, but GPRO appears to have missed out on that audience all together. When the firm’s action camera sales started to slide, CEO Nick Woodman pointed to the firm’s Karma drone as a lifeline.

Yes, GoPro drones were slated to become the next big thing for extreme sports videographers and casual hobbyists, but unfortunately the firm was outdone by China’s drone-maker DJI, whose Mavic device out-shined Karma. Shortly thereafter, its tiny Spark drone offered the same features as Karma, but in a much smaller package.

Can GPRO come up with a better drone that will reposition the firm at the top of the pack? Probably not. By the time GoPro revamps Karma and comes out with a new edition, DJI will likely be nearing its own next-generation release.

Anything Else to Lean On?

GoPro is out of options at this point. The company never really had a clear vision for the future and that lack of direction is coming back to bite GPRO stock. The firm’s share price has fallen nearly 80% since its IPO in 2014, and rightfully so. The market for action cameras is a small one to begin with, and competition has risen considerably.

The number of people in the market for a stand-alone HD camera is already small and as smartphone cameras get continuously better, that market will get even smaller. Not only that, but there isn’t a whole lot of incentive to upgrade. Unlike companies like Apple Inc. (NASDAQ:AAPL), GoPro hasn’t been able to get its existing customers to upgrade their devices. The latest GPRO releases aren’t offering anything compelling enough to persuade people to abandon their working camera and shell out the cash for a newer model.

Is it over?

Don’t get me wrong, the GoPro brand still has a lot of value. The firm has a reputation for producing stellar cameras and its brand image is strong among consumers. The company has a huge following that could be valuable if the firm could find a way to reignite growth with a new product or service that strikes a chord with consumers.

That following and strong brand name could also make GPRO a takeover target for larger tech firms like Apple or Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL). If we assume a purchase price of $8 per share, acquiring GPRO would cost a mere $856.32 million — chump change for a company like Apple.

Bottom Line on GPRO Stock

Yes, GoPro is definitely ripe for the picking, especially if its share price continues to slide. And yes, a buyout would be a boon for shareholders.

However, that’s pure speculation and you would probably be better off heading to the casino than buying GPRO stock on the hopes that a buyout is on the horizon. I think GoPro will be acquired before it will go bankrupt, but the question is how long will we have to wait? For now, you might want to buy a GoPro camera to document your holidays, but you should hold off on buying the stock.

As of this writing, Laura Hoy was long AAPL.

Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/gopro-inc-gpro-stock-too-damaged/.

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