Why GoPro Inc Shares Took Off Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of GoPro were up roughly 8% in early trading on Monday after analyst Shebly Seyrafi of FBN Securities initiated coverage of the camera-maker with an Outperform rating and a $70 price target.

So what: Seyrafi's price target implies upside of roughly 10% above today's pop, but that pop has now pushed GoPro's shares more than 100% higher than their closing price from their recent IPO. Seyrafi's projections hinge on GoPro's market-leading technology, its expansion into content-management solutions through GoPro Studio and App and the GoPro Network, its strong brand recognition, and its long international growth runway -- overseas sales make up less than half the company's revenue at present.

Now what: Investors who've jumped into GoPro since its IPO have been rewarded thus far, but it's also worth considering just how heady its valuations are at the moment. Here's a quick breakdown of GoPro's major valuation metrics as compared to those of the S&P 500 .

Metric GoPro S&P 500
Price to Sales 7.2 1.8
Price to Book Value 107.2 2.8
P/E Ratio N/A 19.9
Price to Free Cash Flow 88.8 17.2

Sources: Yahoo! Finance, Morningstar, Multipl, and Heartland Funds.

Fool analyst David Kretzmann recently argued that GoPro's sky-high valuations shouldn't be cause for concern , and it's certainly true that GoPro's growth rates have been very impressive in recent years. However, savvy investors know that no piece of hardware can dominate its niche forever, so at these levels, one must consider the true size of GoPro's addressable market, and whether the company can justify (or exceed) today's sky-high expectations in the coming years before major hardware players try to grab some of the action-camera market for themselves.

Leaked: Apple's next smart device (warning, it may shock you)

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here !

The article Why GoPro Inc Shares Took Off Today originally appeared on

Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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 - 2014 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


Other Topics