GoPro: Bullish Case Vs. Bearish Case

GoPro Inc GPRO posted phenomenal first-quarter results, which sent its shares soaring on Friday. However, analysts are divided about where the company goes from here.

Wedbush Securities' Michael Pachter and Jason Rotman of Lido Isle Advisors were on CNBC recently to make their respective bullish and bearish case for GoPro.

The Bull

"I think that the bear case is that they have saturated the market. They can't grow. Everybody who wants a camera has one," Pachter said.

"The bull case was proven out last night. The demand is up. They are guiding for sequential increase in demand again in June quarter, and we expect another product launch in the September quarter."

Related Link: GoPro Market Expecting Nearly 9% Move Following Earnings

He continued, "I think these guys had just scratched the surface of international penetration. So, I think they have a long, long way to run. I'd say another year and a half before the bears start to be, see any hint that they are right."

The Bear

"First of all the bear case is clearly not that the market is saturated," Rotman said, "that's not the bear case."

Rotman explained, "I don't care if another 200 million people want cameras; that doesn't necessarily make GoPro a buy. And I'll tell you why. Also, secondly, the international market. Yeah, China is great; a billion people may want GoPros.

"But here's the deal with China – Xiaomi, one month ago, ok? Thirty days ago just came out with a GoPro Hero killer. They came out with a camera, spelled "y-i," but pronounced "ee." They came out with an yi camera; fifty percent of the Hero's pricing, the same specifications. You go on YouTube, you see what people are saying about the Hero killer, the Xiaomi camera – you will be surprised.

"I think in a nutshell, GoPro is a phenomenal company; it's kind of almost like a one trick pony at this point. And you have rising competition that I think over the next few years is going to be a much more level playing field," Rotman concluded.