GoPro (GPRO) stock fell sharply Monday after a well-regarded magazine for investors made a cogent case for what everyone should already know:
GRPO is set to be the next BlackBerry (BBRY).
The big risk to GoPro stock is that the company doesn’t have a moat, Barron’s explains. It makes a tiny, water- and shock-resistant camera. It’s a terrific piece of technology, to be sure, but there are no barriers to entry.
GoPro put existing technology together in an innovative way, but it didn’t create anything that can’t be replicated by competition.
C’mon. It’s a camera.
Anytime a company has a hit like GoPro, established and brand-new companies alike form a wolf pack intent on eating their fills of market share. Many of those companies dwarf GPRO in terms of resources. Sony (SNE) makes a wearable camera, while Apple (AAPL) keeps upping its game when it comes to the iPhone’s camera.
Lest you think the market isn’t worried about what AAPL is up to, here’s Barron’s:
“At least twice in the past nine months, GoPro shares have tumbled on Apple-related news. In January, the mere issuance of a camera-related patent to Apple sent GoPro shares down 12%.”
Indeed, there’s seemingly no end to companies looking to take away an originator’s idea and market. Bulls can argue that GoPro is different because it’s better than the competition, but that guarantees nothing.
Just ask Sony about Betamax.
History Shows That GPRO Is Highly Vulnerable
Being first is hardly a defense either. Indeed, it’s pretty rare that the company that originates a new product category comes out on top.
Google (GOOG) didn’t invent search, Facebook (FB) didn’t invent social networking and Apple didn’t invent the MP3 player.
Heck, Apple didn’t even invent the smartphone. BlackBerry once dominated the market for such devices. It was huge and appeared unassailable — until the iPhone came along.
There’s little if anything to keep Apple and other smartphone makers from subsuming yet another standalone gadget like an action camera.
After all, one-product wonders don’t have a glorious history. Palm once owned the market for digital organizers. Flip disappeared after smartphones began sporting comparable video cameras.
By the way, some analysts think Apple could just up and acquire GoPro, but Barron’s quotes an analyst who gives that a “zero percent chance” of happening.
The market is coming to terms with the fact that GPRO’s product category is there for the taking. Last year, GoPro stock went public at $24 a share and more than tripled in a matter of months. Today, GPRO shares go for $32 and change.
GoPro fans loves their gadgets, as well they should. But there’s a big difference between a product and a stock.
Between direct competitors and smartphones, GoPro’s future is tracking BlackBerry’s past.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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