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GoPro Shares Continue Downtrend Despite HERO+ Launch

GoPro Inc.GPRO recently launched the latest version of its HERO+ cameras featuring both Wi-Fi and Bluetooth applications. With a price tag of $199.99, the newly launched HERO+ cameras are waterproof as well as mountable and compatible with GoPro's multiple applications.

However, the company's shares tumbled 8.2% during the regular trading session on Monday, largely due to sluggishness in the U.S. wearable cameras market and intensifying competition from the likes of Apple AAPL and Xiaomi.

The HERO+ cameras are basically a hybrid version of the cheaper HERO cameras and the high-end HERO4 cameras. Though addition of in-built Wi-Fi and Bluetooth features makes the new version an improvement over the existing HERO line of products, the lack of LCD features, on the other hand, renders it less attractive than the expensive versions.

This apart, GoPro has reduced the price of its HERO4 Session cameras, which happen to be its smallest cameras till date, to $299.99 (down $100 from the initial launch price). With the launch of HERO+, GoPro now offers a broad product portfolio ranging from the high-end HERO4 Black (priced at $499.99) and HERO4 Silver (priced at $399.99) cameras to the entry level HERO cameras (priced at $129.99).

Presently, GoPro enjoys the leading position in the action cameras market with 47.5% share, followed by ION and Sony SNE Action Cam, which hold 12% and 8% market share, respectively, according to Market Realist. Moreover, reports of Futuresource Consulting suggest that the action cameras market is expected to grow steadily till 2019. Availability of 360-degree capture feature has fueled the growth of virtual reality applications that are, in turn, driving the demand for wearable action cameras.

GoPro's continuous efforts to launch new cameras are praiseworthy, considering that shipments of wearable and action cameras are projected to grow to 30.6 million units by 2020 from 5.6 million in 2014. We believe that increasing popularity of extreme sports and enhanced security requirements will be conducive for GoPro in the long term. Also, the company's attempt to come up with new cameras for both entry-level and high-end markets will help it garner maximum number of customers, going forward.

Near-Term Challenges

However, GoPro's recent product launches received an overall lukewarm response from consumers, failing to arrest the recent slide in its shares. Over the past six months, the company's shares has fallen 32%. Also, ongoing sluggishness in the U.S. wearable camera market, especially action sports cameras, is proving to be a major concern for GoPRO.

Recently, the company projected that its fourth-quarter revenues will account for mid-30s to low-40s percent of full-year sales. This is particularly disappointing, considering the company usually garners the maximum revenues in the fourth quarter, driven by the holiday season frenzy. Based on these factors, GoPro currently holds a Zacks Rank #4 (Sell).

A better ranked stock in the industry include Skullcandy, Inc. SKUL that holds Zacks Rank #2 (Buy).

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GOPRO INC-A (GPRO): 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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