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GoPro Crushed After Barron's Warns That 'Danger Lurks'

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GoPro Crushed After Barron's Warns That 'Danger Lurks'
  • Shares of GoPro Inc (NASDAQ: GPRO) were down more than 8.5 percent on Monday.
  • The decline appears to have been triggered by a Barron's article over the weekend.
  • The article compares GoPro to BlackBerry Ltd (NASDAQ: BBRY), and said the stock could fall almost 30 percent from Friday’s closing price to $25 per share.

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

While some analysts see an attractive entry point open, Eule believes this is not the case,as 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 noted, "the risk hasn’t changed." In fact, he names a few potential competitors -- such as like Apple Inc. (NASDAQ: AAPL) and Xiaomi -- that could pose a serious threat to GoPro going forward.

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

Disclosure: The author holds no stakes in any of the securities mentioned above.

Posted-In: Palm Xiaomi Barron'sMovers Tech Media Best of Benzinga

 

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