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GPRO: It’s Time to Start Buying GoPro Stock Again

To GoPro or go home?

GoPro (GPRO) has seen better days. Bears of GoPro stock weary of the potential to scale action camera sales, and the looming threat of Big Bad Apple (AAPL), decimated GoPro’s post-IPO highs (which initially spiked over $90). GPRO stock has fallen more than 17% so far this year.

gopro-stock-priceGoPro stock’s growth story is far from over, however, as CEO Nick Woodman is sporting a few ideas to boost revenue by nearly 40% this year alone, and another 20% in 2016, while increasing earnings by 225% in the current quarter.

Driving GoPro stock toward continued growth is its market opportunity, evolution into a full-blown media platform, and competitive advantage.

GoPro Is Expanding its Relevance  

GPRO hasn’t sapped its market dry in the least; the tiny Hero4 Session camera is appealing to folks put off by GPRO’s more bulky cameras, and GPRO has initiatives in virtual reality and drones that could transform the way users interact with GPRO products.

Take GPRO’s 360 degree camera array for stereoscopic and spherical capture, the former of which seems perfectly primed to make GoPro the device in demand for sharing virtual reality videos through the Facebook (FB) Oculus Rift, or as the go-to device for marketers selling vacation spots in the hospitality industry.

The most exciting catalyst for GoPro stock growth is the notion of developing a drone with a GoPro built into it, which GoPro won’t outright admit, but is most likely developing:

“Oh, people are speculating. We haven’t shared that. Headlines man! Headlines. To see what we’re doing now and what we’re accomplishing is amazing. Three years ago we had three people in product development at GoPro and we were working on how to get the next camera out. Now we’re developing multiple types of cameras. We’re getting into spherical arrays and flying machines, all while growing a global media brand that spawned from everyone’s adoption of our technology.”

As for those headlines, that’s what Wall Street likes to buy and sell on, and right now the headlines are still selling a growth story with tremendous upside in the drone market, which is expected to grow at a compound annual growth rate of 19% from now until 2020.

GoPro Media Platform

GoPro is transitioning from camera company to entertainment platform, and key to that is how well GPRO facilitates the creation and sharing of content, and the easy-to-use Hero4 Session is just the beginning.

With 3.1 million YouTube subscribers, GPRO simply needs to entice users into creating and sharing more content through easier solutions in software and hardware, the latter nailed by GPRO’s latest, the Hero4 Session.

This isn’t the first mention of Woodman’s attempts to break out of the product business and into the platform business, as he was quoted in a Feb. discussion with Fortune as saying:

“Our vision for GoPro is a big one and it’s not something we’re going to realize this quarter, next quarter or the next…this is an incremental, evolutionary thing.”

The next step in that evolution was hiring Hulu’s ex-head of original development, Charlotte Koh. Woodman tapped Koh to bring “Hollywood creatives, studios and networks” together to create original unscripted content for GoPro, such as an agreement with the NHL and ESPN X Games for athletes to wear GoPro rigs to capture the intensity of the sport live from their perspective.

GoPro Growth Still Unfettered                  

The rumor mill churned earlier this year on word that Apple bought patents from Kodak to develop a “GoPro Killer,” and GoPro stock fell as a result. However, GoPro CEO Nick Woodman isn’t worried about Apple:

“I’ve spoken to [Apple CEO] Tim Cook and there’s zero reason to believe those guys are developing a GoPro competitor.”

Even if Apple was developing the proverbial GoPro Killer, Woodman unpacks it very neatly in this video explaining brand awareness and why Apple, or any company for that matter, can’t start throwing their weight around an arena where GoPro’s name rings true.

Entering the action camera business isn’t as simple as making a durable camera and throwing it on the shelf. No, the action camera business is essentially the GoPro business, and as noted by Woodman in the video, over 6,000 videos per day are uploaded with “GoPro” in the title (probably more by now), something that would seem ridiculous for content created by any other device.

Is GoPro stock the “do no wrong” investment we thought it would be in the months post-IPO? No. But, now that the enthusiasm for GoPro stock has tempered, and the true reality behind the GPRO business has begun to crystallize, it’s time to start buying GoPro stock again.

As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.

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