GoPro Inc. (GPRO) Information Technology – Computers & Peripherals| Reports May 5, After Market Closes.
Key Takeaways
- This quarter, GoPro (NASDAQ:GPRO) is expected to take a loss of 57 cents on $171.28 million in revenue, according to the Estimize consensus data
- The action camera space has become increasingly crowded and commoditized, with peers such as Sony and Xiaomi putting pressure on GoPro
- The $400 HERO4 camera has consistently missed sales forecasts, leading to steep price cuts to spur demand
Lately, GoPro can’t do anything right. Sinces its IPO in 2014, the stock has declined nearly 65% and in the past year and a half that number reaches 90%. The biggest problem for GoPro has been waning demand in an oversaturated action camera market. GoPro was so successful in the past because it was the only one of its kind. Now there are a plethora of companies which manufacture similar cameras that are more inexpensive. As a result, earnings and revenue have been relatively lackluster. Last quarter featured a 180% decline on the bottom line while sales slipped 31% compared to a year earlier. This quarter, GoPro is expected to take a loss of 57 cents on $171.28 million in revenue, according to the Estimize consensus data. Since its last report, per share estimates have been cut 137% and now reflect a 325% drop from a year earlier. Revenue estimates on the other hand have fallen 36% and could be half of what we saw in Q1 2015. Given GoPro’s track record, it’s not surprising that the stock reacts negatively during earnings season. 
Once a favorite of Wall Street, GoPro’s stock has fallen from its good graces on weaker demand and an economic slowdown in China. Just last Monday shares tumbled once again after analysts at Pacific Crest lowered expectations for 2016 and 2017 EPS and revenues, as well as average selling price (ASP) expectations. The action camera space has become increasingly crowded and commoditized, with peers such as Sony (NYSE:SNE) and Xiaomi putting pressure on GoPro. The company’s target market has become saturated with cheaper and more innovative products, severely hurting its bottom line. The $400 HERO4 camera has consistently missed sales forecasts, leading to steep price cuts to spur demand. Investors are holding out hope that GoPro’s Karma drone, set to launch later this quarter, is the product that can resuscitate the company. It still remains to be seen how several recent acquisitions of smaller companies such as Kolor, which produces 360-degree videos, and video editing startups Stupeflix and Vemory, can help the company diversify their business.
Do you think GPRO can beat estimates?