GoPro Introduces Entry-Level Action Camera, Shares Pop on News of Potential Offer

GoPro

GoPro has introduced a new entry-level version of its action camera amid declining sales ($1.2 billion in ‘17, down from $1.6 billion in ’15) and a wave of competition (see: Sony, Yi). The $200 Hero is “as easy to use” as a smartphone, with functionality that closely resembles the company’s higher priced models (minus 4K, 360 degrees, less fps). The camera maintains a 2” display and a touch screen back, shoots 10MP photos and 1080p video at 6 fps, has video stabilization, is voice controlled, waterproof up to 33 feet and both WiFi and Bluetooth enabled. The product is being marketed as a “great first GoPro”, one for “people looking to share experiences beyond what a phone can capture.”

Howie Long-Short: GoPro (GPO) shares jumped 7% (to $5.22) on Thursday on news that Xiaomi Corp. is thinking about submitting an offer for the beleaguered action camera maker. Of course, the news doesn’t exactly come out of left field, as we noted back in January that the company had hired JP Morgan to explore a sale. GoPro currently has a market cap of $763 million, but according to The Information, could fetch as much as $1 billion.

Fan Marino: Offering a device for the masses (as opposed to the outdoor enthusiast), may enhance unit sales, but the strategy has failed GoPro (GPRO) before. In 2015, the company introduced a $130 Hero and a $200 Hero+. While the devices sold, the company had cannibalized sales of their higher-tiered products (Hero 4 Silver, Black) in the process; revenue growth dropped from 41% in ’14 to 15% in ’15. By early 2016, GPRO had discontinued the Hero & Hero+ and by the end of the calendar year, was promoting a $300 Hero 5 Session as their entry-level camera. Revenue declined 27% in 2016 and the company reported a full-year loss.

It should be noted that in March, the company signed a licensing deal with the global manufacturing firm Jabil, Inc. (JBL), enabling their use of GPRO lenses and sensors within 3rd-party “Go-Pro approved” products (think self-driving cars). It’s the company’s hope that a higher profit margin licensing business will offset margin decline as sales of the new device grow.

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GoPro Drops to All-Time Low Following Inaccurate Report

GoPro

GoPro (GPRO) CEO Nick Woodward said his company is open to “uniting with a bigger parent company” that can help it scale in size, but that it is not actively shopping itself. Woodward’s comments came after reports earlier in the day (Mon.) indicated the action camera company had engaged JPMorgan to actively explore its sale. Following release of the initial story, shares dropped to an all-time low $5.04; before rebounding to finish the day down 12.77% ($6.56). Woodward did acknowledge JPMorgan was the company banker.

Howie Long-Short: It’s been a busy week for GPRO; the company also dropped 4th quarter revenue projections by $130 million (from $470 million to $340 million), announced the layoffs of 200-300 employees as part of a corporate restructuring and its plans to close the Karma drone division. Weak demand during the holiday season and a $100 drop in the cost of the Hero6 are to blame for the lower revenue figures; while the company is winding down its drone division, citing an “extremely competitive market” and foreseeing a stringent regulatory environment that will stunt drone sales in the coming years.

Fan Marino: Shareholders disappointed in the company’s performance since reaching a high of $98.47 in Aug. ’14, will at least be pleased to hear that Woodward isn’t cashing in at their expense; he announced he’ll be reducing his salary to $1.

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SONY ANNOUNCES UPCOMING RELEASE OF ACTION CAMERA TO COMPETE WITH GO PRO MODELS

Sony (SNE) has announced it will be releasing a new shock proof, crush proof, action camera to compete with GoPro (GPRO). The 1.0 inch 15.3 MP RX0 should deliver superior image quality, as its sensor is bigger than any of GoPro models currently available. The camera shoots video in 4K, is waterproof up to 10 meters and captures slow motion at up to 960 frames/second with a resolution of 1920x1080p, a feature not typically found in a camera priced under $1,000. The RX0 will cost $700 and is expected to ship in October.

Howie Long-Short: GPRO is facing strong competition from Sony, Canon (CAJ), Apple (AAPL) and Samsung (KRX: 005930) in the action camera space and still managed to grow revenues 34% YOY in Q2 ’17. They have the #2 selling drone brand in the U.S., a pilot going for a device designed to capture fully immersive VR content and a mobile editing app that has seen usage increase 112% YOY. I don’t see the RX0 putting a damper on GPRO’s recent momentum.

Fan Marino: The GoPro Hero5 Black is $399. It is roughly the same size as the RX0. For $50 (case) it’s nearly as durable. The control options are slightly different, but each has their benefits. The big difference is the slow-motion capability on the RX0. Is that worth $300? Not for me.

Sony’s latest competitor to the GoPro is a cute black box

GOPRO SALES UP 34% YOY; POSITIONED FOR FUTURE GROWTH IN VR, DRONE SALES & MOBILE VIDEO EDITING SOFTWARE

GoPro (GPRO) shares soared with news that the company grew 34% YOY, generating $297 million in Q2 2017. While shares have fallen 40% over the past year amid a series of delays, recalls and general poor software quality, CEO Nick Woodman is pleased with the company’s growth across all markets internationally. GPRO appears to be well positioned for future growth as well, with a growing virtual reality market, high-end drone business and mobile video editing app (usage up 112% YOY).

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GoPro shares surge 20% after earnings: ‘We still have significant room to grow,’ CEO says

Fan Marino: Even if I were an outdoorsman (I’m more like an indoorsman), what do you do with all that raw footage?