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GoPro (GPRO) in a Soup: Can the Stock Rebound in 2016?

The year 2015 was a comparatively unfruitful one for GoPro Inc.GPRO , which still continues with its bumpy ride. The company's shares have been mostly down in the latter part of the year. Yesterday too, GoPro plunged 9.61% during the regular trading session on NYSE as Morgan Stanley MS downgraded the stock and trimmed its price target to $12.00 from $23.00. The reasons were weak product demand, higher inventory as well as weak pricing strategy.

Overall, GoPro's shares have plummeted 44.77% in the past six months, an unnerving statistic that is sure to rattle investors. The company, having grabbed headlines for its meteoric rise throughout 2014, recently featured in the news for its sharp fall in share prices. Presently, the company is trading way below its Initial Public Offering price of $24.00.

There is no respite in sight for GoPro in the remaining days of the year. A recent analyst note released by Morgan Stanley indicates that darker times are ahead for GoPro. Morgan Stanley spokesperson Katy Huberty commented that GoPro's fourth-quarter sales might trend below its present forecast range of $500-$550 million. However, GoPro's sour Christmas sales are in sharp contrast to wearable fitness-tracking devices manufacturer Fitbit Inc. FIT , which continues to witness a robust hike in online sales.

2016 - Light at the End of the Tunnel

Although GoPro has been on its all time low, there is light at the end of the tunnel. Learning from its mistake in 2015, the company has made extensive plans to accomplish these in 2016 and bounce back on the growth lane. Particularly, the company has decided to increase investment in marketing strategy, which proved to be a major drawback in 2015.

GoPro is in the process of introducing the next generation of capture devices, particularly HERO5, in the year ahead. Also, venturing into the air-born equipment market, GoPro is going to launch its quadcopter drone named 'Karma' in the first half of 2016. Another awaited launch is GoPro's six camera rig to be introduced this year.

Moreover, aiming towards transforming itself from the 'camera maker' to 'content maker', Gopro has been developing various types of software solutions and hardware to curtail the complexity of managing, editing and sharing contents on different media platforms. Most recently, the company brought in Apple Inc. AAPL Watch features in the GoPro App for iOS to enhance its device's control panels.

Additionally, GoPro has been focusing on offering its immersive imagery video experience to millions of people across the world through its GoPro Channel. In November 2015, the company inked its second MVPD deal with Europe's leading entertainment company, Sky. The deal entails the launch of GoPro Channel on Sky's next-generation home entertainment system, SkyQ, which will be introduced in early 2016 across UK and Ireland. With these two collaborations, from early 2016, GoPro videos will be presented on two of the world's largest TV platforms, Sky and Comcast.

Our Take

There is no denying the fact that GoPro with a Zacks Rank #4 (Sell) stock, is in miserable phase right now, with negativity pouring in from all directions. However, the company seems to have taken its letdowns positively and buckle up for the year ahead. If things go as planned, GoPro may rise again from the ashes and become the 'apply of the eye' of investors.

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GOPRO INC-A (GPRO): Free Stock Analysis Report

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FITBIT INC (FIT): Free Stock Analysis Report

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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.

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