GoPro Shares Getting Killed After Barron's Story

• Shares of Volkswagen AG (ADR) VLKAY are not the only ones getting killed on Monday. GoPro Inc GPRO’s stock are down more than 8.5 percent on the first day of the week.
• The decline seems to have been triggered by a Barron's magazine article published on Saturday.
• The article in question compares GoPro to BlackBerry Ltd BBRY, and assures the stock could fall almost 30 percent (from Friday’s price) to $25 per share.

According to a Barron’s article published Saturday, “Danger lurks as others enter the market for action cameras.” Author Alexander Eule highlights the stock’s poor performance over the past year; since the shares hit a peak of $98 in October of 2014, they have lost about two thirds of their value and are now trading below $33.

While some analysts see an attractive entry point open, Eule believes this is not the case – as he thinks the future will not be particularly kind to GoPro. “History hasn’t been kind to one-product wonders like GoPro, which now dominates the market for video cameras. Blackberry once had a similar perch in smartphones. So did Palm in the days of digital organizers. And Flip, an impressive video camera in its own right, surged in popularity until it was usurped by cellphone cameras.”

Trading at 18 times forward earnings, the stock price is no longer prohibitive. However, the author notes, “the risk hasn’t changed.” In fact, he names a few potential competitors –like Apple Inc. AAPL and Xiaomi- that could pose a serious threat to GoPro going forward.

In addition, other companies like Sony Corp (ADR) SNE, which provides GoPro with image sensors but also sells its own action camera, are also a source of concern.

Disclosure: Javier Hasse holds no stakes in any of the securities mentioned above.