GoPro must rethink its VR strategy

GoPro was once a Wall Street favorite. Right after the IPO, the stock peaked at about $87 in October 2014. That was then. The stock has been falling since then and are now trading at about $12.

The stock has plummeted on weaker demand and an economic slowdown in China. Many analysts have lowered GoPro`s expectations for 2016 and 2017 EPS and revenue, as well as average selling price expectations.

 

gopro

 

The competition in the market put a pressure on GoPro as both Sony and Xiaomi are launching similar products. The action camera space has become increasingly crowded and commoditized. The company`s target market has become saturated with cheaper and more innovative products, severely hurting its bottom line.

They will also meet challenges from Facebook on their VR ambitions. Facebook encourage everyone on the platform to make their own high-end 360-degree cameras, which means GoPro need to build a new strategy for their VR ambitions.

Investor need to know that GoPro is innovative enough to create a new VR capture device that can beat their competitors like Facebook.

GoPro President, Bates said last quarter that virtual reality is a «key initiative,» and that it had «several products in development that will position GoPro as a leader in VR.»

The competition between Surround 360 makers are tightening and GoPro can lose the high-end VR camera market to other new players and one of the cheaper rivals are Ricoh.

The $400 HEO4 camera has consistently missed sales forecasts, leading to steep price cuts to spur demand. Thats not profitable for the company in the long run, so investors are now holding out hope that GoPros Karma Drone, set to launch later this quarter, is the product that can resuscitate the company.

GoPro bulls belive the launch of Karma drone and a new HERO5 cameras might get the firm back on track, but the company doesnt have a new release date for either device. We only know its gonna be later this quarter.

This puts growth expectations at -302% for EPS and -48% for sales.

Esimize consensus calls for EPS of $-0,55, which is three cents above Wall Street. Revenue expectations of $171,6M are just slightly higher than the Street`s $169,6M. Numbers on the bottom-line have been ratcheted down 899% in just the last 3 months, with top-line numbers reduced 49%.

Watch out for the report on May 5, 2016, after the close.

GoPro aquired smaller companies like Kolor, which produces 360-degree videos, and video editing startups Stupeflix and Vemory, and remain to see if that can help the company to diversify their business.

 

skjold5

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Advertisements

Leave a comment

Filed under Stocks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s