Markets

1 Key Reason Investors Shouldn't Worry About GoPro, Inc.

When it comes to GoPro stock, the market has clearly been uneasy. In less than two months, shares have been halved from levels above $60. But the sell-off, which primarily appears to be driven by lower-than-expected guidance provided by its chipmaker, Ambarella , seems to have little substance.

GoPro's business is growing rapidly. Chart source: GoPro

But for the critics who insist on thinking of Ambarella's guidance as a bad sign for GoPro's future, it should be noted that even Ambarella shrugged off the temporary downturn in its wearables camera chip sales.

"Historically Q3 has always been our seasonally high quarter," said Ambarella CFO George Laplante. "But because the launches occurred in Q2, I think we really have to look at the average of Q2 and Q3 as to volumes in that marketplace." And Laplante also noted that the average growth for that season looks fine, prompting him to predict there shouldn't be "any difference in the seasonality going forward."

The argument that Ambarella's guidance for its wearables camera chip segment foretells tough times for GoPro just doesn't hold up. And the company's conservative valuation in relation to its growth prospects makes this sell-off seem even more irrational.

The best action for investors to take from here is to simply wait on an update directly from GoPro. As it stands, the last note from the company came in a CNBC interview with GoPro CEO Nick Woodman last week, in which he sounded quite optimistic about the company's prospects.

Meanwhile, I'm seriously considering taking advantage of this illogical market behavior and buying shares during the next week.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article 1 Key Reason Investors Shouldn't Worry About GoPro, Inc. originally appeared on Fool.com.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns and recommends GoPro. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GPRO

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More