GoPro (O:GPRO) has had an incredibly rough time in the market recently as a result of a product offering that appeals to a relatively small audience. However, last week, the company saw incredible gains as rumors surfaced that it would be a good idea for Apple (O:AAPL) to acquire the struggling camera maker. However, as the week begins, the stock is falling yet again, fueled by a Morgan Stanley (N:MS) downgrade. Today, we'll talk about the downgrade, whether or not its likely that Apple will acquire GoPro and what we can expect to see from GPRO moving forward.
Morgan Stanley Downgrades GPRO
In a recent report from Morgan Stanley, investors found out that the investment firm isn't expecting to see the stock perform positively any time soon. As of today, Morgan Stanley has effectively downgraded GPRO from a rating of “Equalweight” to “Underweight”. Along with the downgrade, Morgan Stanley also reduced the target price on the stock, dropping it from $23.00 to $12.00. The downgrade was the result of low sales leading to expected high inventory going into 2016. Also, the firm is concerned that drone cameras aren't going to be enough to pick up sales at GoPro.
Is Apple Going To Acquire GoPro
At this point, GoPro is struggling in a big way, and that's not likely to change unless something drastic happens. However, rumors of something drastic surfaced last week, leading to gains. The rumors surrounded the idea that Apple may purchase GoPro, but is this really a likely scenario? In my opinion, the answer is no! The reality is that if Apple were to acquire GoPro, the company would pay a huge amount of money for something they already have. In fact, one of the factors leading up to the poor sales performance of GPRO is the fact that many cell phone cameras, including the iPhone produce a quality of photo that's just as good as what GPRO has to offer. Really, I don't see any reason that Apple would want to acquire the company.
How GPRO Is Performing Today
As investors, we've come to expect that anytime there is bad news surrounding a publicly traded company, we see declines. With the downgrade from Morgan Stanley and the idea of an acquisition by Apple starting to fade, GPRO is having a very rough day in the market today. Currently (10:41), the stock is trading at $16.96 after a decline of 12.84% so far today.
What We Can Expect To See From GoPro Moving Forward
Moving forward, I'm not expecting to see much by way of positivity from GPRO. Unfortunately, the company is having a rough time with selling their products. This is the result of an incredibly small target audience and high levels of competition, primarily from smartphone manufacturers like Apple. The reality is that I don't believe that Apple is going to acquire GoPro, nor do I believe that the company is any closer to an “Ah Hah!” moment that will lead to improved sales volume. In other words... put a fork in it... this goose is cooked!