GoPro Now Trades At Bargain-Bin Valuation Metrics
GoPro Inc (NASDAQ: GPRO) has fallen off a cliff. Down 20 percent in after-market trading on Wednesday following negative guidance revisions, shares have flirted with single digit territory. For a stock that traded in the $60s a year ago, that's a massive disappointment for anyone involved.
Analyst Trip Chowdhry told Benzinga after the selloff that the company is a "declining asset business," and added that it should be compared to Zynga Inc (NASDAQ: ZNGA), Groupon Inc (NASDAQ: GRPN) or Fitbit Inc (NYSE: FIT) -- singularly-focused, momentum-reliant stocks that ultimately fell short.
So Just How Cheap Is GoPro Stock Now?
Even more odd, GoPro has now shifted from a high-priced momentum name to a value play (or value trap). The stock trades at a Price-to-Earnings Growth multiple of just 0.50 -- anything below 1.00 is viewed as cheap by investors.
GoPro also trades at a P/E and forward P/E in the 12.0 range, significantly below Ambarella Inc (NASDAQ: AMBA), Fitbit, or even the aforementioned Zynga.
As the Wall Street Journal wrote in December, GoPro could be a value trap in 2016. The outlet cited poor hero4 Session sales over the Fall and holidays, along with shrinking fourth quarter revenue. "Ambarella also said weakness in the action-camera business is expected to last into the first half of next year, suggesting that a major new lineup from GoPro is unlikely until the second half," columnist Dan Gallagher wrote at the time.
Despite the stock's cheap valuation, " it’s more likely a value trap until GoPro’s plans for next year come into focus," Gallagher added.
GoPro trades near $11.85 in Thursday's pre-market action; it was near $50 exactly one year ago.
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