GoPro Inc (NASDAQ:GRPO) has experienced a massive rally in September, with GPRO stock up roughly 28% in little over a week. However, the rally could be coming to a halt today given that the stock is trading down more than 1% in early morning trading.
The hype all started when the company announced that its Q3 numbers would be at the high-end of guidance. It got a further boost yesterday, after images leaked of a new HERO6 action camera in retail packaging — suggesting the new GoPro camera will be ready for holiday sales as expected, and not hit by production delays like last year’s HERO5.
HERO6: New GoPro Camera Leaks Online
Yesterday, Photo Rumors published a photograph snapped of a GoPro HERO6 Black, complete in retail packaging. This wasn’t a low resolution, blurry or clearly mocked up image, and it appears to be legitimate, showing full detail of both the camera itself and the retail packaging it’s in.
The new GoPro camera is expected to be announced at the end of the month. The photo (assuming it is legit) tells several things. First, it confirms specs of the HERO6, including an upgrade to 4K video at 60fps (the HERO5 does 4K video at 30fps), with 33-foot water resistance. The more important information — at least for GPRO investors — is that the camera is shown in complete retail packaging.
Why would we care about that? This suggests the company has the camera into production and that it will be available for sale over the all-important holiday shopping season. GPRO stock had taken a brief pause during its run-up after the Q2 guidance announcement, but spiked 4.78% the day the HERO6 photo was published.
The Importance of the New GoPro Camera
Despite the recent success of its Karma drone, GoPro remains primarily an action camera company. That reliance on these speciality cameras has made the company vulnerable to factors ranging from competition to market saturation. With Apple Inc. (NASDAQ:AAPL) finally joining the water resistant club with last year’s iPhone 7, there were also fears that the action camera would join the point-and-shoot camera as the next victim of smartphones.
That didn’t happen. In fact, despite a slowdown in sales last year, global action camera sales are predicted to grow at a healthy 15%, led by Ultra HD action cameras — like the HERO6. Last quarter, GoPro posted 34% revenue growth, while noting its HERO5 was the best-selling digital camera in the country for the quarter.
The HERO6 is needed to maintain that momentum, especially during the holiday shopping season when action cameras make popular gifts. GoPro’s sales may be humming right now, but competitors like Garmin Ltd. (NASDAQ:GRMN) aren’t slowing down.
2017 Holiday Season Looking Good for GoPro
Last year’s holiday sales period was disastrous for GoPro, when production issues caused delays in getting HERO5 cameras onto store shelves. Consumers who couldn’t find HERO 5 cameras either held off or worse, chose a competing action camera instead. Add in the recall of its Karma drone and holiday season 2016 was a low point in the company’s history.
GPRO stock had lost half of its value between September — when the Karma and HERO5 were announced — and the end of the December because its two marquee products were either recalled or in limited supply throughout the holiday shopping season.
This year, things are looking much better for GoPro.
The company will be going into the holidays with the new HERO6 action camera, a new Fusion VR camera and the Karma drone. A lot will be riding on the HERO6 — the flagship model of the company’s bread and butter action cameras — and the photo of the new GoPro camera in retail packaging is a positive sign that production has ramped up.
If GoPro can get the HERO6 onto store shelves for Christmas, a repeat of last year’s holiday season thrashing of GPRO stock is not in the cards. Even better, the stock’s recovery should continue into 2018.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
