Just as online broadcasting mediums have only surged in popularity over the past several years, a new wave of consumer products have taken the retail markets by storm.
Click to Enlarge Labeled by the electronics industry as action cameras, they attach to virtually any object — a car windshield, a biker’s helmet or even one’s self.
With a lightweight chassis and a technical configuration designed for in-motion footage, many of today’s leading action cameras satisfy a niche demand that is still in its infancy.
The success of action cameras is clearly evident in the numbers. In 2010, global sales of action cameras reached a meager 200,000 units. The following year, sales jumped 300% to hit 800,000 units.
This year is already guaranteed an entry in the record books, with performance trends on pace to exceed 10 million units sold. By the end of 2015, the growth rate of the action camera industry should surpass 5000% over a six-year period.
This should be a boon for companies that either specialize in action-camera technology or offer it under a broad portfolio of products, yet their performance in the financial markets weave a different tale. Action camera stocks simply haven’t created the consistency of buzz for Wall Street that it has for the budding YouTube star.
Perhaps there’s nothing more frustrating for an investor than a fundamentally sound industry that falls short technically. Which one of the leading publicly traded action-camera stocks can finally deliver the goods?
Action Camera Stocks: GoPro (GPRO)
Click to Enlarge GoPro (GPRO) not only popularized the action-camera craze, it is the action-camera craze. Led by the charming and relentlessly energetic CEO, Nick Woodman, the former U.C. San Diego graduate took a singular idea — providing sporting enthusiasts the means to effortlessly capture their escapades — and turned it into a worldwide phenomenon.
Incidentally, this is both the good and the bad for GPRO stock. Investors certainly were enthused about the action camera’s potential, at one point driving up the GPRO stock price to nearly triple-digits, providing 290% returns for those that got in on the company’s initial public offering.
But since October of 2014, it’s been a stomach-churning ride for GPRO investors, with the company losing roughly 60% of market capitalization over a five-month period. A recent article from Barron’s added more doubt, with a headliner that bluntly forecasted a $25 price target for GPRO stock, or a 25% discount from an already embattled valuation.
Woodman countered, noting that the criticism of GoPro being a “one trick pony” is a myopic one. Nevertheless, aside from technological diversity and the marketing of accessory devices, GoPro’s sole product lineup is action cameras. This makes the company highly susceptible to fierce price-cutting competition, where a premium GoPro action camera can cost upwards of $500.
That is likely the reason why many investors find GPRO stock to be off-putting, especially given the atmosphere of uncertainty lingering in global markets.
Action Camera Stocks: Panasonic (PCRFY)
Click to Enlarge Panasonic (PCRFY) is not a name that is naturally associated with the action camera industry, yet it threatens to undermine GoPro’s dominance. Last year, Panasonic introduced the HX-A500, the world’s first ultra high-definition action camera, which combines 4K resolution, image stabilization and slow-motion capabilities all in an extremely lightweight package.
But why should GoPro’s management team — which essentially owns the action camera sector — fear Panasonic?
First, the former heavyweight has decades of video technology experience that it can leverage, and while Japan Inc. has suffered from bouts of irrelevancy in certain industries, Panasonic has proven it can still pack a mean punch with the advanced A500.
Second, and more importantly, Panasonic can easily compete on price. The A500 is $150 below GoPro’s Hero 4 Black model, and the Japanese electronics company has a vast portfolio upon which to rely — its action camera sales will neither make or break PCRFY stock.
However, the diversity of Panasonic has not sustained its recent performance in the markets. Year-to-date, PCRFY stock is down 9%, with most of the losses attributed to the equities meltdown in China and the Dow Jones. Although PCRFY stock was one of the biggest beneficiaries of the so-called Abenomics policy to rejuvenate Japanese markets — rising three-fold between November 2012 and May 2015 — its present consolidation pattern does not look particularly inviting.
Ultimately, PCRFY stock may be suffering from a “too many tricks pony” syndrome. Either way, investors have not been impressed.
Action Camera Stocks: Sony (SNE)
Click to Enlarge If there’s any company that would desperately want to go back to the 1980s, it would be Sony (SNE). Well before the concept of selfies and mobile video capture arrived by storm, Sony first launched the very idea of portable entertainment with their iconic Walkman cassette players more than 36 years ago.
Fast forward to the present, Sony has been more of a Johnny-come-lately, chasing trends rather than pioneering them — the wild ride in SNE stock over the years being emblematic of the paradigm shift.
Despite the jokes and criticisms, Sony is still a technological powerhouse with which to be reckoned, particularly when it comes to digital imaging. Sony was one of the first companies to popularize mirrorless camera technology, a growing industry subsection that, in a nutshell, enables high-quality photography without the bulkiness of traditional single-lens reflex cameras. Inevitably, such profound expertise will continue to work its way into all of Sony’s product lines, including its action cameras.
Like smaller cousin Panasonic, Sony has a vast array of weapons at its disposal. Even though GoPro asserts that their action cameras are preferred heavily over Sony’s offerings, the reality is that if push comes to shove, the latter could easily overpower the former with both technological advancements and price-cutting mechanisms.
Investors have largely voted in favor of Sony’s broader range. SNE stock is up about 22% this year, defying the gravitation pull of both weakness in Asian equity markets as well as questionable fundamentals in its key North American sales region.
Although it’s quite obvious that SNE stock benefitted tremendously from the initial launch of Abenomics, Sony has done an admirable job of keeping the ship upright. From a technical analysis perspective, SNE stock is one of the few consumer electronics companies whose shares are inside a bullish trend channel.
While it may be a blast from the past, SNE stock has the intellectual capital and brand name leverage to rise above the fierce competition in action cameras.
As of this writing, Josh Enomoto was long SNE.