GoPro IPO

Selfie here and Selfie there. Selfie everywhere. People want to share with the rest of the world what they are doing on social media platforms like Facebook, Instagram and Snapchat. In addition people now tend to take action films and one of the most popular cameras right now is GoPro.

The founder and CEO in GoPro is 38-year-old Nicholas Woodman, who started the company with $65,000 of his own capital. His father invested $100,000. The company has been profitable since day one, Woodman said in an interview on TV. Nicholas Woodman own a 48,8% stake, while his father Dean Woodman has a 6,4% stake.

The company has grown and in December 2012, Foxconn International Holdings invested $200 million and valued the company at $2,25 billion. What a jump! GoPro is probably one of the most successful wearable electronics company right now.

CEO Terry Gou is mentioned during the IPO and he is from the Chinese electronics manufacturer Hon Hai Precision Industry Co. That company is better known as Foxconn. It’s expected that the Taiwanese billionaire would take a seat on the board.

Surprisingly, Terry Gou is not listed as a director on the list. Other names on list is the former Flextronics CEO Michael Marks and current Yahoo CFO Kenneth Goldman.

The California-based company is registered to go public, but the company is the latest to file for a «secret» initial public offering. New rules, under the 2012 JOBS act, allow companies to keep much of their information out of the public eye until shortly before the shares begin to trade.

That`s probably why you don`t here so much about the company in the media at the moment. The act allows companies with annual revenues of less than $1 billion to file with the SEC confidentially.

JPMorgan is the lead banker on the offering, but the date for GoPro`s IPO hasn`t yet been set. As I know so far, the IPO will be at the end of the second quarter of 2014. GoPro may raise $100 million in an initial public offering.

It`s probably not the best time go public right now with all the tech bubble talk around the world. Other companies have delayed its IPO plans due to the market conditions. Companies that have decided to enter the market has not succeed. King Digital is trading well below its IPO price.

Woodman say GoPro plans to list on the Nasdaq under the symbol «GPRO». Revenue for 2013 came in at $985 million and that`s up 87% from the year prior. Net income clocked in at 61 million, up from $32 million in 2012.

So far in 2014, growth is down 7% from $255 million. Net income is down from last year`s first quarter as well. It`s down 52% to $11 million. The company’s revenue has doubled year-over-year up to 2012, but that trend has since ceased.

The company shipped fewer units in the first quarter of 2014. 852,000 cameras compared to 954,000 in the same period last year. They shipped 3,85 million units of its cameras last year, and that is up 66% from the year prior.

As usual, it will be difficult to grab some stocks during the IPO, but there is always a backdoor. GoPro didn`t succeed alone. Another growth company is Ambarella Incorporated (AMBA). GoPro wouldn`t be much without them.

AMBA is a leading developer of low-power, high-definition (HD) video camera systems-on-a-chip. I assume you haven`t heard of the company, but thay are everywhere. You just don`t know, because you can`t see them, but they can see you.

If you walk into a secure area like a bank, airport or a government building, there`s a strong chance that you are being watched by a camera using Ambarella technology. When you watch cable or satellite TV, you`re watching the end result of a signal compressed by Ambarella`s proprietary algorithms.

Ambarella has a key position in the wearable technology market and act as a backdoor into the GoPro IPO because it exclusively manufactures the internal systems-on-chips that power the entire lineup of GoPro`s Hero wearable cameras.

Ambrella`s system helps GoPro make a miniature $300 cameras with the same 4K video quality as a $20,000 camera. That`s not bad! GoPro monopolize about 70% of the wearable sports camera market. It`s expected to see that market to rise by 50% each year. Ambrella will capitalize on this growth.

AMBA dropped -1% yesterday and the stocks is down -27,3% so far in 2014, but it`s up +56,9% (1 YR). I think AMBA has a big opportunity as the market for wearable and action cameras improves. Their relationship with Google and GoPro gives them a great chance to improve sales.

According to Cisco (CSCO), mobile video is set to grow at a whopping 90% annual rate, reaching 71% of total mobile data traffic by 2016, and AMBA want a piece of the action I think. Google Helpouts and GoPro`s IPO can push Ambarella`s stock higher in a fast growing new market.

Be careful, because other big brands are coming into the market. I`m talking about brands like Panasonic (PCRFY), Texas Instruments (TXN), Fujitsu Limited (FJTSY), Sony (SNE) and Canon (CAJ). Others companies are forging their way into this growing new market. That`s Qualcomm (QCOM), NVIDIA (NVDA), Broadcom (BRCM) and Samsung (SSNLF).

They will all fight in the same market and all of them want a share in the market. This will be a huge challenge in the growing new market.

Reports today:

08:15 a.m EST ADP Nonfarm Employment Change
10:00 a.m EST Factory Orders m/m

 

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