The Future of GoPro(NASDAQ:GPRO) stocks
Could we see a rebound or is it still too risky?
GoPro (NASDAQ:GPRO) used to be one of the tech pioneers. It was definitely regarded in the same light as stocks such as Microsoft, Cisco, Apple and Netflix. Now it is a shadow of its former self.
The company had an IPO in 2014 starting at around $40. The stock price initially soared for the first few months to a peak of $87, more than doubling its IPO. The value of the stock slumped rapidly afterwards. Even though it maintained a value between $40 and $60 for several months thereafter investors were still not confident in GoPro’s ability to turn adequate profits. GoPro (NASDAQ:GPRO) eventually fell in value to a low of around $15 per stock and now it closes at $16.79 cents.
So what happened to GoPro?
One of the main reason is its rising cost of revenue. This has resulted in the company losing out on potential profits year after year. The cost of revenue was 48% in 2011 and it was 58% in 2015. Additionally the company has failed to meet targets due to underperformance in sales as well as poor management. These issues would be bad enough if it was able to grow sales but that was not the case.
After all is done GoPro has put some effort into dealing with its many issues. High as they may be they are not insurmountable and the investors seem to believe that. The incremental rise in investor confidence has raised GoPro (NASDAQ:GPRO) by 13% since August.
The company has launched new product lines. The Hero 5 Black, Hero 5 Session and their new camera drone The Karma. This has helped to put some life back into GoPro. It is expected to boost sales and build interest in the fledgling company once more.
But is this enough?
The company CO’s set some high targets for it to achieve for the year. They intended to deliver between 1.35 and 1.5 billion; a target it doesn’t seem it will be able to meet. The company will need to be able to capture over 900 million dollars in profit in the remaining quarter to meet it. More than it has done for the rest of the year. It would not be surprising if there are some investor concerns at the end of the quarter.
It is clear that GoPro products, though great reach market saturation very quickly. For this reason it will become increasingly more difficult for GoPro to make sales. The product line simply has a hard time capturing consumer as well as investor attention and consequently their dollars. For the time being GoPro will remain a low performer; not that there isn’t any reason for optimism but it is a steep learning curve and GoPro will have their work cut out for them.