GoPro Crashes 20% After Production Delay, Analysts Remain Cautious

GoPro Inc GPRO shares plunged and kept dropping after the company announced Wednesday afternoon a last-minute production delay for its new flagship HERO8 Black camera.

GoPro sees preliminary third-quarter sales of $123 million-$127 million versus a $308.2 million estimate.

Sell-side analysts reduced near-term revenue estimates on the news, as the company guided down its own revenue outlook for the second half and full calendar year 2019.

The Analysts

Morgan Stanley’s Erik Woodring lowered his price target on the stock from $5 to $4.50. He continues to rate the stock Underweight.

Wedbush analyst Michael Pachter maintain a Neutral rating and $5.50 price target on the stock.

The Theses

GoPro said it now expects second half 2019 revenue to be lower by 5%, taking full year revenue down 3%.

Woodring said the cause for the product delay was unclear at the moment, though he did note GoPro said there’s no risk of a scrap.

“Nevertheless, the later than expected timing of the launch will result in a significant headwind to 3Q results, but a tailwind to 4Q,” Woodring wrote in a note.

Pachter credited GoPro for execution improvement in 2018 after a couple rough years, and said even with the setback, the company still is targeting positive EPS for the full year, compared to a loss last year, on year-over-year revenue growth of 6% to 9%.

Pachter adjusted fiscal 2019 revenue estimates down from $1.25 billion to $1.23 billion and non-GAAP EPS from 40 cents to 31 cents.

Price Action

GoPro's stock was down more 20% to $4.08 at time of publication.

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