Support the Wall Street Examiner! Choose your level of support to receive a free proprietary report as my thanks. Click the button below to see your options. Become a Patron!

Don’t Bet on a GoPro Stock Rebound

This is a syndicated repost courtesy of Money Morning - We Make Investing Profitable. To view original, click here. Reposted with permission.

 

Liquidity moves markets!

Follow the money. Find the profits! 

GoPro stock had a brief rally last week following strong Black Friday sales, when GPRO jumped 3% intraday Thursday. But don’t bet on a sustainable GoPro Inc. (Nasdaq: GPRO) stock rebound.

In fact, the next GoPro stock priceslump has already begun.

Before we get into why we’re still avoiding GoPro stock, here’s what sent GPRO shares soaring last week.

Why the GoPro Stock Price Rallied Last Week

GoPro shares jumped nearly 3% to an intraday high of $10.40 on Thursday after reporting that sales for its cameras over the vital Black Friday weekend rose 35% year over year at leading retailers. Meanwhile, sales on the company’s website climbed 33%.

Crucial holiday quarter sales of GoPro’s new Hero5 Black camera have so far been “solid,” the company said in a statement. Since its launch on Oct. 2, Hero5 Black has been the top-selling digital-imaging device in the United States, according to NPD Group.

Hero5 sales are outperforming the company’s highly successful Hero4 launch two years ago by about 20%. If numbers remain strong, GoPro could sell around 2.8 million cameras in Q4. That would be well above what analysts have been projecting.

Trending: Get the Best Investing Research Today to Grow Your Money

Yet the company is maintaining its projections for about $625 million in revenue for the period, which suggests an average selling price of around $223. That is 16% below the Hero4 during its launch. And it’s worth noting that despite key improvements, the Hero5 Black costs $100 less than its predecessor.

That likely explains CEO Nicholas Woodman’s statement in which he said despite the strong start to the holiday season, “…we have a lot of work to do to finish the quarter and our fiscal year.”

Last month, GoPro issued a recall for 2,500 of its new Karma drones after some of them lost power while in the air.

The $800 Karma is GoPro’s attempt to expand its reach beyond the crowded action camera market, as was as complementing its camera sales.

GoPro was hoping that Karma would be a big seller this holiday season. But those hopes have been crushed. GoPro is not offering replacement units. Instead, it’s giving customers a full refund. The company plans to send out new drones once the problem is fixed.

While all the fuss last week was about the company’s Black Friday showing, that wasn’t the actual driver of GoPro stock last week. The biggest thing moving the GoPro stock price was the company’s restructuring announcement…

Why We’re Not Buying GoPro Stock in 2017

GoPro said it has begun a company-wide restructuring that will cut roughly $650 million worth of non-GAAP costs in fiscal-year 2017.

Included in the restructuring is a 15% workforce reduction, or about 200 full-time jobs. At the end of Q3, GoPro had 1,722 employees. The company said it is also canceling hiring for opening positions and will close its entertainment division.

The restructuring will result in charges of between $24 million to $33 million.

GoPro last month reported a Q3 2016 loss of $104 million, or $0.74 a share. That compared with a profit of $18.8 million, or $0.13 a share, a year earlier. Revenue sank 40% year over year to $240.6 million.

For Q4, the company forecasts revenue between $600 million and $650 million. Analysts were looking for $657 million.

For FY2016, GoPro said it expects to post $1.25 billion to $1.3 billion in revenue. That was below the company’s previous target of $1.35 billion to $1.5 billion.

Money Morning has been avoiding GoPro stock since the 2014 IPO. While GoPro stock once traded near $87 per share, GPRO is valued below $10 today.

With shares continuing to go in the wrong direction, we are going to continue to watch this one from the sidelines.

At $9.82, GoPro stock is down 45.47% year to date and 89% since peaking in 2014.

To get full access to all Money Morning content, click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

Disclaimer: © 2016 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

 

The post Don’t Bet on a GoPro Stock Rebound appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Try Lee Adler's Technical Trader risk free for 90 days! Follow the money. Find the profits!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.