It’s been a disappointing run for GoPro Inc (NASDAQ:GPRO), to say the least. GoPro stock has stabilized since March, trading between $7.50-$9 since then. But, that’s small consolation to GPRO shareholders, who saw the stock climb as high as $90 in late 2014 before plummeting.
GPRO stock is now firmly a turnaround play. The company lost $200 million on a non-GAAP basis in 2016. In response, management slashed costs and raised cash through a convertible debt offering earlier this year.
I’m skeptical of that turnaround, however, even with GoPro stock around $8. But, even as a GPRO bear, I’ll admit to being somewhat intrigued by the company’s apparently forthcoming Fusion 360-degree camera.
Earlier this month, GoPro shipped the first Fusion units in a pilot program, and early reviews have come out as well. Personally, I don’t think Fusion is enough to save GPRO stock. But, there is reason to think it could make the bull case for GPRO a bit more interesting.
The Fusion and GoPro Stock
GoPro has taken an intriguing go-to-market strategy with the Fusion. The product isn’t expected to be released commercially until the end of this year, according to management. Of course, given the company’s checkered history with product launches, consumers and investors would be forgiven for being somewhat skeptical of that target.
But, ahead of the release, GoPro solicited applications for the Fusion from content creators interested in getting a first look at the product. Management said it received more than 20,000 applications, from which it selected a small group of production teams. Among them are the Golden State Warriors, Fox Sports, and live streaming pioneer Digital Domain Holdings Ltd (OTCMKTS:DGMDF).
The hope is that these professional creators can give feedback to GoPro — and also, potentially, create content with the Fusion that gives consumers a better understanding of its capabilities. Whether the strategy — or the product — works has yet to be determined. But, GoPro at least is giving the Fusion a fighting chance.
Plus, an early review of the product suggests potential optimism. The Fusion looks much like the Hero5, albeit bigger. It records not just in 4K, but 5.2K, and its app and Overcapture software both look impressive (albeit in a very early review).
After the slowing sales of legacy GoPro products, and a late and disappointing entry into the drone market, a win with Fusion would be a nice change of pace for GoPro. But, at least so far, it’s not enough to change my sentiment toward GPRO stock.
GPRO Stock Still Isn’t Cheap Enough
The problem with the Fusion is that the market for a more expensive, more technical 360-degree camera is likely to be much smaller than the action camera market pioneered by GoPro. 360Fly, in which VOXX International Corp (NASDAQ:VOXX) owns a stake, has had a product on the market for a couple of years, with limited success. Garmin Ltd. (NASDAQ:GRMN), meanwhile, is beating GoPro to market with its VIRB.
And, broader problems remain. Execution under CEO Nicholas Woodman continues to be poor. But, the dual-class structure of GoPro stock mean there’s little shareholders can do about it. GPRO is targeting profitability next year — a projection which likely assumes some help from Fusion.
I still think it will be incredibly difficult for a primarily single-product (or, at least, single-category) company to compete. GoPro’s travails have long reminded me of Fitbit Inc (NYSE:FIT), another company that went from innovator to laggard in a matter of years.
I’m a bit more constructive on GPRO stock, though, because — unlike Fitbit — GPRO isn’t trying to execute a turnaround while competing with Apple Inc. (NASDAQ:AAPL). However, GoPro still has a long and difficult path ahead.
The Fusion might be a step down that path, but it’s still just a step.
As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.