GoPro Stock At Historic Low. Is It Time To Make A Move?

  • GoPro has had 75% of its stock value wiped out over the past financial year.
  • GoPro has failed to meet sky-high expectations.
  • Moving forward, GoPro's brand image will be a big mover for sales once they diversify.

To say that GoPro (NASDAQ:GPRO) has endured a bad year would be putting the current predicament of the stock mildly. GoPro is an innovative action camera company marketed on the premise of youth, adventure, and freedom to capture great moments. As with many new and innovative tech companies, they owned the market.... until copycats began to pop up and undercut GoPro.

The biggest mistake of GoPro was in not using their huge brand image to diversify into other market segments. For instance, their image could have been used to launch an exclusive content portal, covering sports, entertainment etc. Moreover, huge improvements in smartphone camera technology and selfie sticks has meant that the GoPro is no longer  a must-have. GoPro is facing tough competition from smartphones and copycats.

These market pressures and other factors have caused GoPro stock to lose 75% of its value during the current financial year, and 60% of that loss came during the past few months. As a result, investors are looking at the stock with some trepidation- and rightfully so. However, GoPro still has some significant positives (more on that later).
GPRO stock chart

Source:GoPro Stock Price Data by amigobulls.com

Once a stock has lost 75% of its value, some might argue that it is basically dying a slow and painful death; however, GoPro has some strengths which might make you take a second look.

Zero debt

In this day and age it is challenging to find an American family with zero debt; not to talk of of a company worth more than $2.5 billion. Moreover, GoPro has $513 million just sitting in the bank. Therefore, when it comes to financial security, GoPro is in a lot better situation than a lot of companies.

Astonishing brand power

Such is GoPro's reputation as a camera manufacturer that the term 'GoPro' has become a synonym for action cameras. It is worth noting that GoPro has an amazing public perception. Through Youtube and strategic partnerships, they have managed to create a perception of being an adventurous, youthful, and energetic brand. The aforementioned are attributes which are challenging to ingrain in the public perception.

Could they have used their brand to win more in the marketplace? Well, of course. However, there are talks of an exclusive content network for GoPro users being built, and the company is set to enter the lucrative drone camera market in 2016.

GoPro stock performance

Someone looking just at GoPro stock's drop over the past financial year, might think that the company has a bad financial performance. The issue is that GoPro has a lot of expectation being placed on it, and it has failed to live up to them. For instance, GoPro has grown its revenue by 43% year-over-year.

It is worth considering that GoPro only had their IPO in June of 2014, and more than doubled in value by October of 2014. And when that upward performance failed to continue, investors began to sell the stock, which drove down the price, and triggered a waterfall of selling. Some were hoping to quickly grow their investment as it was the new 'hot stock' on the block.

Conclusion

A positive public perception is one that it is difficult to buy, and GoPro have managed to build a positive one in such a short space of time. Plus, as soon as they use the GoPro name to expand their horizons, it is those who get in when the price is low who will be able to get a good return in the near future.

Arguably, GoPro isn't making big moves as quickly as the market will like. However, when a company grows so quickly in such a short space of time, it is wise to have a period of consolidation. In fact, GoPro has already began to bounce back in time for the busy gift-buying period.

GoPro's main attraction isn't in its action camera business- smaller camera manufacturers have undercut them quite deeply. The main attraction is what GoPro could become once they diversify with such a positive brand image powering their success.

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Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
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Comments on this article and GPRO stock

Davep
bullish
Investors don't turn your back on this stock, it may be dumb to think this now but going into the future its the right choice. Basically entry into virtual reality and the holiday season makes it golden for the stock. http://www.profitconfidential.com/stock/... Read this and you will get the jist of it.
reply
Do share this awesome post