In case you haven’t noticed, GoPro Inc (GPRO) is on a tear. The undisputed leader in the action sports camera arena was up more than 7% by lunchtime Monday, as GPRO stock reached heights not seen since January. It’s up 2% so far today.
That is the second trading day in the past two weeks that’s sent GoPro through the proverbial roof, the other being July 28, with GPRO stock finishing that day up more than 12.5%. The difference, however, is that the latter was the result of a better-than-expected Q2 earnings report.
What Drove the GoPro Rally?
A recent FCC filing by Steven Kim, the Senior QA Compliance Engineer at GPRO, mentions an embedded GPS component in the GoPro Hero5 camera, and a supposed video clip from the Hero5 instruction manual shows an improved interface.
Sports enthusiasts have been waiting a long time for the release of the Hero5, which was originally expected to be out in time for the 2015 holiday shopping season. The market reacted harshly when management announced the delays.
However, when news that the FCC filing included apparent GPS capability, tech enthusiasts and investors alike have again become excited about GPRO stock. The current Hero4 model does not contain an embedded GPS module because GoPro engineers have been unable to remedy power drain issues. It would seem, however, that the problems have been solved.
Additionally, the inclusion of GPS capabilities popping up in action sports cameras from competitors such as Garmin Ltd. (GRMN) and Sony Corp (ADR) (SNE) — which, by the way, has done nothing to improve their market share — was likely a motivating factor for management to further redesign the GoPro Hero5.
What This Means for GPRO Stock
There’s no telling if the rally for GPRO stock will continue, but the market’s reaction to the news of the improved GoPro Hero5 is substantial. It shows that investors have confidence in the company and are excited about future releases.
So, even if GPRO stock gives back some of the recent gains, it’s still a keeper in my book. The real rally will come when management finally announces a firm release date for the GoPro Hero5.
If it’s released in time for this year’s holiday shopping season, expect GPRO stock to surge significantly.
As of this writing, Greg Gambone did not hold a position in any of the aforementioned securities.
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