GoPro GPRO stock plummeted over 30% on Monday to hit a new all-time low after the company announced that it is set to cut jobs and anticipates weaker than expected fourth-quarter results.
The action camera company released a statement on Monday morning noting that GoPro expects to post $340 million in fourth-quarter revenues, which would mark a 37% year-over-year sales decline in the highly important holiday quarter. On top of the substantial drop off from last year's sales, GoPro's preliminary Q4 revenue guidance comes in far below the $474.35 million that our current Zacks Consensus Estimate calls for.
GoPro also announced that it would be cutting its workforce by over 20%, from 1,254 employees to less than 1,000.
The planned layoffs and lowered guidance stem in large part from weak demand for the GoPro's flagship action cameras. The company noted that it will slash the price of its Hero6 cameras from $499 to $399, which GoPro said would lower revenues by roughly $80 million in the fourth quarter.
"As we noted in our November earnings call, at the start of the holiday quarter we saw soft demand for our HERO5 Black camera," CEO Nicholas Woodman said in a statement. "Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier. Our December 10 holiday price reduction provided a sharp increase in sell-through."
GoPro, which operates in a market geared towards the outdoor sports and adventure community, also announced that it would exit the quickly growing aerial drone market. The company pointed to an extremely competitive environment and increasing regulatory concerns in the U.S. and Europe as major factors behind this decision.
The San Mateo, California company's chief executive also announced he is set to cut his own cash compensation to $1 in 2018-Woodman took home $800,000 in cash compensations in 2016.
"We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018," Woodman said.
However, for now, it appears that investors don't think that GoPro's major job cuts and reduction in operating costs will outweigh weak demand for its only real products, especially as it exits a potential major revenue generating business.
Shares of GoPro sunk by as much as 33% on Monday morning to hit a new record low of $5.04 per share. The company's stock price has since climbed back up and now hovers around 20% below Friday's closing price.
Before today's massive selloff, shares of GoPro had fallen over 21% in the last 12 weeks alone.
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