GoPro Inc (NASDAQ: GPRO)
GoPro had an incredible IPO followed by great growth in the market for several months. However, the stock is struggling at the moment, and for good reason. At this point, GPRO has fallen well below a key technical point. Unfortunately, GPRO is now trading well below its IPO price. Today, we’ll talk about why GPRO is having such a hard time in the market, whether or not this is a decline that the company can recover from and what we can expect to see moving forward.
Why GoPro Is Having Such A Hard Time
When GoPro first came out, demand was thought to be incredible. After all, this is the first brand that created a camera designed to capture first person views of extreme sports. However, how many people do you know that play extreme sports? The reality is that GoPro cameras are best for those that are involved in sports like skateboarding, surfing, biking, and more. While it may seem as though the market potential of this type of thing is massive, GPRO is finding it to be the exact opposite. In fact, the audience for the product simply isn’t large enough to sustain the meaningful growth that investors expect to see quarter after quarter.
As a result of the declining demand for GPRO cameras, we’ve seen several negative trends with regard to earnings estimates. When it comes to full year earnings, in just the past month, we’ve seen four estimate revisions, moving down expectations. Unfortunately, there have been absolutely no revisions over the course of the next month moving expectations up. As a result, analyst average earnings expectations for the year have fallen from $1.34 to $0.81. Unfortunately, we’ve seen the same same with regard to fourth quarter earnings. When it comes to fourth quarter earnings, expectations have been revised down from $0.67 to $0.30.
What We’ve Seen In The Market As A Result
As we can expect to see anytime there is negative news with regard to a publicly traded company, GPRO is having an incredibly rough time in the market. Currently (11.13.2015 @ 1:10 p.m.), GPRO is trading at $21.35 per share after a loss of 7.77% so far today. Unfortunately, this is well below the IPO price of $24 per share which is a key technical indicator. Generally, IPO prices are key emotional indicators from a technical perspective. When share prices fall below IPO prices, it tends to strike fear in the hearts of investors. As a result, we generally see massive declines in the value of the stock for some time moving forward.
What We Can Expect To See Moving Forward
While I hate being the bearer of bad news, I have to admit that I’m not expecting to see much by way of positivity out of GPRO any time soon. Unfortunately, the reality is that the market just isn’t as big as we once expected it to be. As a result, the company’s earnings aren’t likely to prove to be more positive than expectations and investors really have no feasible reason to expect growth out of the stock moving forward. At this point, GPRO has quite the hurdle to get over. They have to find a way to either repurpose their flagship product in a way that would benefit the average consumer or come out with a new product designed for the average consumer. In either case, we’ve got plenty of time between now and then.
What Do You Think?
Where do you think GPRO is headed and why? Let us know your opinion in the comments below!