Action camera company GoPro, Inc. (GPRO) has been struggling with consumers cutting back on spending amid high inflation and recession concerns. The company’s revenue declined 19% year-over-year in the first quarter. Moreover, GPRO flipped to a loss.
The company is focusing on its ‘updated go-to-market strategy’ to restore its product pricing to pre-pandemic levels. GPRO believes this move will accelerate growth in units, subscribers, revenue, and earnings. Additionally, GPRO is diversifying its revenue streams across both hardware and software. While its subscription-centric model is gaining traction, attaining a significant share of GPRO’s total revenue might take some time.
“We did a great job adjusting our go-to-market strategy for the pandemic,” Chief Executive Nicholas Woodman said. “But ironically, that same go-to-market strategy that worked so well when consumers weren’t going to stores and stores were closed, and people were shopping online more — that strategy that allowed us to thrive during that period — has been holding us back in this postpandemic world, where people are spending a lot more time and a lot more money in retail, they’re shopping in stores as a form of entertainment.”
With the stock sinking in price, it might be best to wait for a better entry point. The stock is trading below its 50-day and 200-day moving averages of $4.44 and $5.21.
Let’s look at some of GPRO’s key financial metrics to understand the situation.
Analyzing GPRO’s Financial Trends
GPRO’s net income fluctuates from negative to positive. Starting at a negative $93.49 million on June 30, 2020, and ending at a negative $6.71 million on March 31, 2023, the net income growth rate has been 485.16%. The most significant fluctuation was between March 31, 2021, and June 30, 2021, shifting from negative $13.42 million to $54.50 million.
GPRO’s revenue showed a general increase from June 2020 to September 2021, ranging from $91.3 million in June 2020 to $112.8 million in September 2021, representing a 23.7% growth rate. After September 2021, revenue experienced minor fluctuations, with the last reported data in March 2023 being $105.2 million, greater than 11.3% of the first reported value.
GPRO’s gross margin has seen a generally increasing trend, rising from 33.9% in June 2020 to 41.3% in December 2021, an increase of 23.4%. However, the most recent data point for March 2023 shows that the gross margin had decreased to 35.1%, indicating a fluctuating trend.
The latest Analyst Price Target for GPRO is $5.00, which is a decrease of 46.7% from the first value of $12.00 in November 2021. The price target had remained fairly stable since early 2021, oscillating between $12.00 and $13.25 until May 2022, when it decreased to $11.50. This downward trend continued over the next five months, dropping to $8.00 in November 2022 and eventually reaching the most recent value of $5.00.
GPRO’s Price is Down by 21.63%
GPRO appears to have a decreasing price trend, from $5.328 on December 9, 2022, to $4.185 on May 31, 2023. This is a drop of 21.63% over the course of this period. Here is a chart of GPRO’s price over the past 180 days.
GPRO POWR Ratings: Quality, Value, and Momentum
GPRO has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #30 out of 44 stocks in the Technology - Hardware industry.
The POWR Ratings for GPRO show that the notable ratings are for quality, value, and momentum. Quality is consistently in the range of 85-91 over the months; value is also highly rated, ranging from 81-95, while momentum has the most notable changes, starting at 10 in December 2022, dropping to 7 by February 2023, and finally at its lowest rating of 1 by May 2023.
How does GoPro Inc. (GPRO) Stack Up Against its Peers?
Other stocks in the Technology - Hardware sector that may be worth considering are AstroNova Inc. (ALOT), Panasonic Holdings Corp. (PCRFY), and Canon Inc. (CAJPY) -- they have better POWR Ratings.
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GPRO shares were trading at $4.18 per share on Thursday afternoon, down $0.02 (-0.48%). Year-to-date, GPRO has declined -16.06%, versus a 10.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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