The Magnitude Of GoPro's Slide Worries Barclays

Barclays’ Joseph Wolf expressed concern regarding the magnitude of the Q3 miss reported by GoPro Inc GPRO, despite the miss being driven by a production issue rather than being demand driven.

Wolf maintains an Equal-Weight rating on the company, with a price target of $12.

Stock Slides

“We were of the opinion that 3Q results were relatively unimportant as investors would be focused on the all-important holiday season with Karma and new product lineup,” the analyst mentioned.

However, the stock traded down 22 percent in the after-hours session on November 3.

Wolf expects the selloff to continue into November 4, “given the importance of the new products to the story and unresolved investor concerns over addressable market and product life cycles.”

Forward Guidance

The analyst also pointed out that the Q4 guidance would mean a cut in the estimates. Management has also made a meaningful cut to the 2017 opex guidance, although there still are uncertainties regarding the demand for Karma and HERO5 in the post-holiday season.

“Karma will be just a small portion of revenues in 4Q and we still do not have a great line of sight modeling a contribution in 2017 given the nature of the market and competitive dynamics,” Wolf stated.

A Wall Street Journal report mentioned that GoPro expects to “remain in the red” during 2017, given that its new products have failed to drive profitability.

Shortly after its earnings release, GoPro was down 20%. At last check, however, it had slightly recovered to $9.80.