Mini camera aficionado GoPro Inc. ( GPRO ) is not having a good day of trading. Shares of the company plummeted more than 15% Monday after Morgan Stanley ( MS ) downgraded the stock and cut its price target nearly in half to $12 from $23.
Analyst James Faucette cited two critical concerns for GoPro: there is a high inventory of HERO4 Session devices related to poor sales since its release earlier this year and users do not enjoy the lack of innovation among GoPro's video editing software.
(Also read " GoPro's Hot New Hero4 Camera: New Catalyst for GPRO Stock? " for a review on the camera.)
"Key challenges related to editing and storage capacity have yet to be 'adequately addressed,' and that may lead to slower-than-expected adoption of GoPro's newer products, such as its Karma drone in 2016," said Faucette.
Today's action comes in the wake of renewed buyout hope from GoPro investors. With the stock losing about 70% of its value this year, it is clear that GoPro needs a shake-up, and a purchase from a tech giant like Apple (AAPL) could be exactly what is needed.
Regardless, the latest GoPro crash has a lot of investors entirely fed up with this struggling stock. Users took to social media to voice their concerns, and the sentiment on StockTwits and Twitter seemed to be mostly negative:
GoPro is now trading at an all-time low $GPRO pic.twitter.com/DsIqrlcMIF- Mike Murphy (@mcwm) December 14, 2015
$GPRO With a diarrhea stock, how long do you think their top talent will stay in the hot Silicon Valley job market?- Obe Calp II (@ObeCalp) Dec. 14 at 11:06 AM
$GPRO Nighmare in all possible dimensions. soon they ll file for Chapter 11? WTF is going on in this company? where is crisis management?!- Adnane (@bladnane) Dec. 14 at 11:13 AM
Maybe $GPRO should start selling hoverboards? #sarcasm- Paul R. La Monica (@LaMonicaBuzz) December 14, 2015
Even still, some investors called today's movement an overreaction and weren't ready to give up on GoPro just yet:
$GPRO I remember when C. Ichan waited for NFLX to get to mid the mid 7's before buying a boatload of it. That is how these big boys play.- Pter Smith (@Enlightened) Dec. 14 at 10:51 AM
$GPRO That's the market for ya - a stock is either priceless or worthless no rhyme or reason, and no middle ground. patience is the key.- Pter Smith (@Enlightened) Dec. 14 at 10:23 AM
One of the main critiques of GoPro since its market debut has been its "niche factor." The company's tiny action cameras are cool, but buyers are finding their short-term use unworthy of the high price tag. On top of that, the company's standard software makes storing and editing footage more difficult than it should be.
Despite this, massive moves from downgrades like this are sometimes overreactions, and there very well could be a slight recovery over the next few days. Regardless, GoPro currently has a Zacks Rank #4 (Sell), and it is becoming increasingly difficult to find the long-term strength in this stock. Any more bad news will certainly keep investors crossing their fingers for a buyout.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.