GoPro Inc. (GPRO) shares finally gave investors good news as they soared 18% on trading on Thursday. The company’s shares are trading now at $10.26. The jump happened in reaction to the announcement by the company that they would show a profit on an adjusted basis in the 3rd quarter of 2017. The company’s Chief Operating Officer, CJ Prober, stated that consumer demand for the action camera was strong. He also stated that channel inventories had reduced and the two new products to be launched – the HERO6 and the 5.2k spherical camera Fusion – were creating a lot of excitement.
The Company said that they expected a revenue growth in the higher end of their predicted $290 – $310 million, and expected the gross margin to also go up 36% to 38%.
GoPro Inc. is a technology company which was founded in 2002 by Nick Woodman. The American company is an action camera maker that also creates its own GoPro mobile apps as well as video editing software.
Woodman was inspired to create an action camera on a surfing trip to Australia where he watch a tramp surfing but could not get close enough to get a decent action picture. He then raised money to start his company by selling belts made from beads and shell at $20 per belt. He also sold camera straps. His parents also invested another $230,000 and he was able to launch GoPro. After two years, in 2004, the first GoPro camera was launched, which was a 35mm film camera. Today, GoPro cameras are the by-word for action pictures and are used all over the world, especially in extreme sports.
In February 2014, GoPro secretly filed for an IPO (Initial Public Offering) with the SEC (Securities and Exchange Commission). The company had hoped to raise $100 million with the sale of their shares with which they wanted to pay off part of a $111 million loan and also invest complimentary businesses and technology. Trading was targeted to open at $21 – $24 per share.
In June 2014, GoPro debuted on the Nasdaq as GPRO. They sold 17.8 million shares at $24 per share, and earned a whopping $427.2 million. The company was valued at $2.95 billion. GoPro shares shot up to $98 per share by the end of the year.
However, from 2015 onwards, the company has seen a steady downslide in its share price and value. One of the biggest problems the company is facing is that their devices target a niche audience. GoPro has failed to make inroads into the mass market as most android and iOS devices already have the same features. By 2016, GoPro shares plummeted by 51.6%. A massive product failure (the company’s first drone, Karma) led to a net loss of $420 million by the end of the year. The Karma drone was to be the company’s savior. However, a four month delay to launch as well as product defects caused a disaster for the company. The drone kept falling out of the sky. The expensive drone, marked at $800, was finally scrapped and the 2,500 units were recalled. The company’s website removed all mention of the product and there is still no update as to whether the drone would be relaunched.
The company is hoping to make a turnaround this year with a double digit growth. This should not be too hard, considering the company’s share prices have fallen from its $98 per share high to a current $10.60. However, investors are skeptical about whether GoPro will be able to dig itself out of the mess it’s in.