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GPRO Stock: What In The World Happened?

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GoPro Inc (NASDAQ: GPRO) Information Technology – Computers & Peripherals| Reports February 3, After Market Closes

Key Takeaways

  • The Estimize consensus is expecting to see EPS of $0.16 and revenue of $437.02 million, slightly higher than Wall Street's estimates of $0.12 earnings per share and  $434.87 million in revenue.
  • GoPro shares have tumbled 40% year to date and over 60% in the past 3 month.
  • Increased competition has flooded the market with cheaper and better alternatives to GoPro's HERO series

Once the darling of Wall Street, GoPro's stock fell over 40% in 2015 on weaker demand and an economic slowdown in China. The company recently issued very weak Q4 guidance which saw saw share prices plunge even further. With layoffs looming and share prices trending just above $10, GoPro is poised to underwhelm shareholders when they report fourth quarter earnings

At the moment, the Estimize consensus is calling for EPS of $0.16 and revenue of 437.02, slightly higher than Wall Street's estimates. That said, the Estimize community has made heavy downward revisions in the past 3 months, cutting EPS by 75% and revenue by 33%. Compared to Q4 2014, this reflects a projected YoY decline in EPS and revenue of 84% and 31%, respectively.

GPRO Chart

GPRO data by YCharts

There was a time when its competitors looked at GoPro as a force to be reckoned with. Even though the company still uses advanced technology, competitive forces from Sony and Xiaomi have put pressure on GoPro. The company's target market has become saturated with cheaper and more innovative products, severely hurting its bottom line. The $400 HERO4 camera has consistently missed sales forecasts, leading to steep price cuts to spur demand.

To add insult to injury, GoPro faces the threat of a class action lawsuit after shareholders have lost large sums of money. A majority of the potential cases claim GoPro deceived stakeholders by inaccurately projecting sales growth for the 3rd and 4th quarters. CFO Jack Lazar anticipated annual revenue would increase by 56%, but in reality, he was off by 13%. Moreover GoPro's recent Q4 corporate guidance of a 31% decline significantly deviates from its initial expectations of a 17% dip. While most of the suits have not been filed, there remains the possibility that GoPro will settle with numerous disgruntled shareholders.

On the bright side, GoPro recently joined forces with Twitter's Periscope.The new feature enables Periscope users to switch between their smartphone and GoPro camera during a single live stream. This strategic partnership comes at a time when both companies are struggling to stimulate growth. Both Twitter and Periscope's user base will complement the users GoPro already reaches. After news of the deal, GoPro shares rose 2%.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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