Action camera maker GoPro Inc (NASDAQ:GPRO) has been cast aside by the majority of traders over the past year as the company struggled to turn its clout as a high-end camera maker into a profitable business. But GPRO stock has stabilized over the past month as more and more analysts change their outlook for the company.
However, some GoPro stock bears are changing their tune on the stock as the company continues to drag itself forward on the hopes that some of the firm’s future plans will pan out.
I’ve written about the perils of adding GPRO to your portfolio several times before, and although I still believe that GoPro is a poor choice if you’re looking for tech stocks, it’s important to note that the firm could see some forward momentum in the second half of the year.
With that said, I am still skeptical of the company’s ability to follow through on, admittedly, promising plans.
New Products
One of the major drivers for GPRO stock is whether or not the firm’s latest gear will sell, and the company does have products with big potential on the way. GoPro’s Fusion 360 camera has been touted by many as a good step forward into the virtual reality market and a good opportunity to get GoPro loyalists to upgrade.
While the Fusion 360 certainly sounds promising, investors should also keep in mind that as per usual, GPRO is behind competitors like Samsung Electronics (OTCMKTS:SSNLF) and Garmin Ltd. (NASDAQ:GRMN), which have already launched similar devices. GoPro’s 360 camera is still being piloted and isn’t slated to hit stores until later this year.
The same is true for GoPro’s Karma drone. GPRO bulls pointed to Karma as a lifeline for the failing stock, but the drone turned out to be a flop. That left room for DJI Innovations to swoop in with better, cheaper versions, a mistake GoPro is hoping to rectify with a new version.
It’s difficult to say whether or not GoPro’s new drone will be able to chip away at the stronghold DJI has on the drone market at the moment. A huge determinant will be price and whether or not GPRO’s drone can measure up to the DJI drones at a lower price point. However, considering GoPro’s track record with new device rollouts, I’m not holding my breath on this one.
The Software Side
Even if GoPro can hang on to its hardware customers, that won’t be enough to continue generating meaningful growth because action camera users are often unwilling to upgrade their devices for long periods of time.
So for me, GoPro’s efforts to build out software offerings and subscription-based cloud computing are the main determinants of future success.
GoPro’s editing software has been popular, which is a good sign, but where it really needs to excel is live video streaming. If the company is able to produce a camera that is able to connect to 4G without the need for a smartphone, GoPro users would be able to live-stream directly from the device. That would set GPRO apart from its competitors and give users even more reason to upgrade.
Not only would a 4G camera allow for live-streaming, but it would also allow users to immediately back their videos up in the GPRO cloud service, GoPro Plus.
That may convince more consumers to subscribe to the service, which would in turn create a reoccurring revenue stream for GPRO that wouldn’t require any advertising costs.
Bottom Line on GPRO Stock
GoPro could turn itself around, but the question is whether management will be able to execute. In the past, GPRO has suffered with botched new product roll-outs and a lack of planning for the future so it wouldn’t be a surprise if these initiatives are left to fall by the wayside.
There is certainly potential for GPRO stock going forward, but taking a position would be a very risky move.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
