Things aren’t looking too bright for GoPro (NASDAQ: GPRO). As of open on Tuesday, January 16th, its share price was at $6.21. And share prices have been on a recent decline for some time now.
A month ago, on December 15th, share prices were at $8.04 — about a 23% decrease in just a month.
The company is now trading 75% below its $24 IPO price. Wall Street was once fond of this tech company, and consumers wanted to get their hands-on GoPro’s wearable cameras. But unfortunately, a lot has changed since then…
GoPro is struggling to stay afloat. And it’s struggling to keep investors satisfied. Investors are at a breaking point, trying to find any reason to hang on to the company.
Recently, there’s been speculation that the company has met with JPMorgan and has hired the bank to put the company up for sale. But GoPro has denied inquiring about sale options.
GoPro CEO Nick Woodman said, “If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at.”
A Slow Crumble
GoPro announced a week ago that it was shutting down the company’s Karma drone unit and that it’s planning to lay off hundreds of its employees. Naturally, this is not what investors wanted to hear.
I mentioned that GoPro will be letting go some of its employees, and this happens to be the company’s fourth round of layoffs since 2016. Currently, the company’s global layoff headcount is 1,254 employees. And with the recent job cut, the company is expecting to have fewer than 1,000 employees.
Along with that, the company mentioned that it’ll be heavily discounting its Hero6 cameras, which will cause a huge decrease in its fourth-quarter revenue forecast.
The company is branching out into many different directions, like media content, virtual reality, and drones. Unfortunately, it’s infiltrated these markets without fully developing and researching its products for those particular markets.
That assumption is supported by the fact that the company recently exited the drone market. GoPro will be selling its remaining Karma inventory, but after that, it won’t be part of the market. The company overestimated Karma’s potential success in the drone market.
GoPro commented on the situation:
Although Karma reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market. Furthermore, a hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead.
It seems like the company saw these markets that were thriving or on the verge of growth and wanted to put a product out to capture a chunk of their market share…
Not Ready to Call It Quits Just Yet
But it’s not all bad news for GoPro. Well, at least not yet…
The company has two things going for it right now:
- It’s still the leader in its niche action camera market.
- It’s maintaining a strong market and social media presence.
If it were to begin expanding its business into the body cam market, it would be good news for the company.
Market Research Future is expecting the global body cam market to grow at a compound annual growth rate (CAGR) of 17% between 2016 to 2021 and the global home security camera market to grow at a CAGR of 11% between 2017 and 2023.
Axon Enterprise (NASDAQ: AAXN), formerly known as Taser International, dominates this market in the U.S. And because of that, analysts are expecting the company’s revenue to increase by 26% this year.
GoPro could compete directly with Axon and gain some of the market share of this growing market, especially when it means that GoPro could have partnerships with law enforcement nationwide.
A new CEO — someone not so close to the company — with a clear focus on the types of markets that GoPro and its products could thrive in would significantly help the company. An outsider could have a better perspective on the company and the future of its business.
Until next time,
Jennifer Clark
Pro Trader Today