Is There Any Hope For GoPro Stock?

There was a time when GoPro (NASDAQ: GPRO) was riding the wave of the growing adventure tourism market as a key player. In 2016, this market was valued at almost $500 million and is projected to reach $1.3 billion by 2023, registering a CAGR of 17.4%. The sad truth, however, is that GoPro will likely not be around to enjoy this growth much longer. Not, at least, as we know it. 

GoPro's Q4 Earnings 

It may come as a shock to absolutely no one to hear that GoPro's February 5th earnings call was yet another underwhelming affair. The digital-camera maker reported fourth-quarter revenue of $528 million versus expectations of $566 million, with earnings of $0.65 also falling short.

Never fear though: founder and CEO Nick Woodman is optimistic: "We believe we are well-positioned to meaningfully expand both margin and EPS in 2020 thanks to the strength of our entire product line, high-margin Plus subscription service and app monetization strategy."

There you have it, it's going to be a great 2020 for the beleaguered company, much like 2019, 2018 and so on.

Ok, perhaps not...

The company's stock fell nearly 10% the day after the report, bringing its 12-month fall to roughly 15%. This is no short term issue though, as the stock is down 91% in 5 years. 

Where did it go wrong for GoPro?

It might shock you to learn that the last quarter was actually GoPro's second-most profitable in its history, taking in a net of $102 million, and also saw its revenue jump 40% year on year. Its success was driven largely by sales of its new GoPro Hero 8 series, which helped GoPro to eke out a profit of $102 million. As well as that, analysts estimate that 87% of all action-camera units sold were GoPro's.

This is not the report of a failed camera, so where is it going wrong?

Back in 2016, when GoPro had a chance to corner the drone market in the U.S., the company failed miserably. Its lack of ideas and, for lack of a better word, poor quality drones just didn't wow customers. It's hard to become a market leader in drones when you can't even keep them in the sky. This multi-million dollar project was shut down in 2018, costing 250 jobs, and the last of GoPro's reputation.

That's not all. The main problem has without a doubt been founder-CEO Nick Woodman, who has long outstayed his welcome. If he did not have founder control -- 73% voting rights -- he likely would have been booted from the company years ago.

Woodman fancies himself somewhat of an Elon Musk -- founder of Tesla (NASDAQ: TSLA) - eccentric, young, 'cool'. The problem is that he is not delivering. GoPro has been a no-growth company since its 2015 IPO -- aside from a brief 4-month rise following its listing -- and Woodman is the perfect example of how companies should not be run, much like Zynga Inc (NASDAQ: ZNGA) and that founder-controlled disaster.

To put it into context, Nick Woodman was the highest-paid chief executive in the U.S. back in 2014, with an annual salary of $285 million. That is almost half of GoPro's current market cap of $615 million. Needless to say, he is not earning that anymore. 

Is there any future for GoPro?

Right now, GoPro's future looks about as bright as, well, what's the opposite of a button? Yes, the company does have some cash reserves, but it also has a large debt of more than $140 million last June, which has been growing.

Following Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) purchase of Fitbit (NYSE: FIT) back in November, many people have been asking when someone will step in and buy GoPro. The first name on everyone's lips seems to be Apple (NASDAQ: AAPL), and it does make some sense. Not only is Apple sitting on a cash pile of more than $200 billion, but it also has a very sticky eco-system of products that GoPro's cameras would fit nicely into -- with some alterations. As Apple's wearables market grows, there's no reason adding GoPro to the mix would do any harm.

However, this is all just speculation. If GoPro is to survive on its own it needs to go back to its basics and rethink who its target audience is, what do they want, and can GoPro provide it. However, I'm not an expert on such things, I'm just a writer who doesn't want to see a company with thousands of employees go under.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in GoPro. Read our full disclosure policy here.