Action camera company GoPro (NASDAQ:GPRO) unveiled its lineup of new products on Thursday, launching just ahead of this year’s all-important holiday shopping season. GoPro stock rallied a bit because, well, at least a small faction of investors rev up their bullishness whenever the company makes any sort of move.
It was a short-lived surge though. GPRO stock was back in the red again on Friday when those same investors remembered previous product updates just didn’t help reinvigorate sales growth… or even sales stagnation. There’s little assurance this evolution will fare any better than prior ones have.
And yet, the situation may leave enough gas in the tank for a decent trade — although not a long-term investment — for speculators willing to wait for the right sign.
The Picture Hasn’t Changed
It’s a reality even the most disconnected of traders recognize in GoPro. In one camp is the crowd that’s sure the sheer quality and cleverness of GoPro’s action cameras will eventually let the company turn a consistent profit. In the other camp, while observers appreciate and respect the product, they also don’t see any future where it costs the company less than its cameras’ retail price to make and market the consumer devices. There’s just not enough scale or size to make action cameras a viable business.
So far, it’s the latter of the two camps that has been right.
Enter the Hero 7 lineup of cameras, unveiled on Thursday, available via pre-order now, and expected to be on store shelves before the end of the month.
At first glance the three new cameras look much like the company’s previous versions, but there are fundamental differences. Chiefly, the $399 Hero 7 Black now comes with built-in, self-stabilizing technology, while the Hero 7 White takes aim at the lower-end market with a sticker price of only $199… the company’s first real direct addressing of hesitant, price-conscious consumers.
On the surface it’s a brilliant move. Die-hard action camera users will dig the higher-quality videos possible with the Hero 7 Black, while GoPro will open up a whole new market of entry-level owners who may well seek an upgrade at a later time.
The reality of the matter is, however, the five product launches that followed the original Hero line haven’t spurred sustained sales growth. It’s highly unlikely this sixth sequel is really going to fare any better. As was the case with Fitbit (NYSE:FIT), the Facebook (NASDAQ:FB) smartphone and Spectacles from Snap (NYSE:SNAP), it’s not that consumers don’t recognize the quality and cleverness of the product or service. It’s that most of them just don’t care.
Nevertheless, the company may get enough out of the pre-holiday buzz to draw at some respectable (even if temporary) bullishness from GoPro stock.
Charting GoPro Stock
The overreaching backdrop may be depressing, but there’s a short-term glimmer of hope in view.
The past few weeks have been uncharacteristically bullish for GPRO stock. Down roughly 95% from its all-time-peak price as of March of this year, shares have since gained 43% from their early April low.
It’s not just been the gain that’s suddenly so compelling, however. Along the way, GoPro shares have fought their way back above key moving average lines, one of which has become a major support level. That’s the 100-day moving average line, plotted in gray on the graphic below. Three times since August — including just this past week — that 100-day average has reversed a pullback and rekindled strength. More recently, GoPro stock has made its way above the pivotal 200-day line, shown in white.
The bullish effort has been stymied, though. As is also marked on the chart, GPRO has been recently capped around $6.63. Yet, the bulls are still swinging, and as of Thursday have some fresh fodder to work with. If the more-vocal fans and followers can just make enough noise to get the stock above the ceiling at $6.63, the potential trading action that’s been pent-up since June could be unleashed in a hurry.
That’s a big if, but it’s also a big outcome.
Bottom Line on GPRO Stock
Again, don’t confuse a little bullishness from the stock as evidence that the company has finally found its bigger-picture mojo. That’s not what’s happening here. Indeed, if GoPro stock can’t even work its way past $6.63, the launch of the new Hero 7 series means nothing to anyone.
Given the market’s willingness to dish out event-based and headline-based near-term rewards to GoPro though, there may be a worthy trade brewing up. Just don’t stick with it too long, as it won’t be built to last.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.