What Is Going On With GoPro Inc (NASDAQ:GPRO)?

GoPro Inc (NASDAQ:GPRO) has been having a hard time to sell its new range of cameras and this has already priced in company’s stock. In consumer electronics, going simpler and smaller is stated as a no-brainer. However with GoPro it is a different case as it resulted in a bit of head scratching.

Popular for its extensive product line of small, HD action cameras, the company tweaked its winning formula by unveiling the Hero4 Session in July 2015. The camera priced at $400 is nearly the size of an ice cube and boasts only one button. It promoted the idea of an ultraportable camera that is easy to use in no time.

The response

The idea behind the ultraportable camera failed to support easy sale. It was evident when at an investment conference Finance Chief Mr. Jack Lazar stated that the session has witnessed a “difficult” time competing with company’s more popular Hero4 Silver and Black cameras.

This can drive in an extremely challenging fourth quarter, which usually accounts for over 40% of GoPro’s yearly sales. Mr. Lazar expressed that the company intends to spend more on marketing the Session, adding to operating expenses. The company could reduce its price so as to boost its sales. Moreover, guidance from GoPro’s chip supplier, Ambarella, indicates there is not another launch planned in 20915.

The future ahead

Challenges selling a new product can rarely be a death knell for a strong profitable firm that has sold nearly 6.5 million cameras in the preceding 12-month period, up 64% YOY. Jeremy David of Citigroup projects GoPro’s total addressable market to touch $20 billion, almost ten times its prevailing run rate. While company’s cameras may not appear a bargain, GoPro Inc (NASDAQ:GPRO) stock is looking like a bargain deal after falling by 50% in a month. It places its forward earnings multiple at 16 times.

 

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John Eisler

John Eisler

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.