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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Author: John Wall Street

At the intersection of sports & finance.

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