GoPro Inc (NASDAQ:GPRO) had another bad day in the market as it lost over 5% yesterday. It is one of those stocks, which has not enjoyed the confidence of many hedge fund managers even in its heydays. The valuation of the stock has always been in question and frequently the question has been raised if the company is trying to project itself almost as a media company for a higher valuation in spite of being just a consumer electronics camera company.
There was a rumor going on that the bears would come swinging just after the holiday season and this time that has come true. Last week, the strong earnings report of the component maker Ambarella Inc (NASDAQ:AMBA) encouraged the bulls a bit, but that was nullified by the anxiety over the company supplying chips to the Chinese company Xiaomi too.
Technically, GoPro Inc (NASDAQ:GPRO) presents a very interesting chart. The listing in 2014 July saw a sharp spike on the upside before a month long consolidation, only to be followed by a roaring rally from the $38 to $95 levels in just 3 months. The first sharp correction brought it down to $70 levels in just 7-8 sessions. The next phase of consolidation must have encouraged the late come johnnies but the trap was well set as the bears attacked mercilessly to push it down with just small corrective rallies punctuating the fall.
GoPro Inc (NASDAQ:GPRO) is in a very important state right now as it approaches the July-August swing lows, coincident with the lower boundary of the Falling Wedge pattern seen. This pattern implies a deceleration of the bearish momentum, but the bullish implication can be confirmed only a break above $45-46 levels.
Investors may keep an eye on the stock for any breakout accompanied by an increased volume to get in the stock with a low risk-reward ratio.