GoPro Has Quietly Built An App That Could Move It In The Right Direction

With GoPro Inc GPRO set to release earnings after the bell on Thursday, many are wondering whether the company is heading in the right direction.

In March, the company reaffirmed quarterly guidance would be at the top end of its range of its $190-210 million target. Oppenheimer believes investors will look less at the numbers and more towards forward guidance that will indicate if the company will reach its profitability goals for the year.

A key catalyst in hitting its lofty goal rests on GoPro’s video editing app, Quik. In the last 16 months, the company has quietly built a solid app in Quik. Now the key remains if the company can convert users into the GoPro ecosystem, which is a “big task, but a must in our view” Oppenheimer said in a note.

Oppenheimer's criticism regarding GoPro largely was due to its poor editing and sharing experience.

“After acquiring Replay and Splice and launching GoPro Plus over the last 16 months, GoPro has built a capable software ecosystem," analysts led by Andrew Uerkwitz said. "The company rebranded around Quik and this app has largely fixed many of the issues we’ve highlighted.”

While the app works well, Oppenheimer sees the need to convert users of Quik into GoPro users as essential to drive new revenues. The firm believes many Quik users aren’t GoPro users and vice versa, meaning there is a good opportunity to acquire new hardware buyers.

“Despite a few setbacks, we see GoPro taking the right steps," Oppenheimer said. "But the big task will be to prove to consumers that both its hardware/software are necessary.”

Oppenheimer maintained a Perform rating on GoPro's stock.

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