Bear of the Day: GoPro, Inc. (GPRO)
GoPro, Inc. (GPRO) stock skyrocketed for several months following its 2014 IPO, only to tumble for years, finally bottoming during the initial Covid-crash. The action-focused camera maker has once again seen its stock fall after a solid run as Wall Street reacts negatively to its fading earnings outlook and lack of sustainable sales growth.
A Tough-to-Capture Market
GoPro makes small, mountable cameras that shoot both videos and photos. GPRO’s offerings grew popular within the action sports world, from the ski slopes to mountain bike trails, and beyond. GoPro’s various small high-resolution cameras are waterproof, with impressive stabilization features and much more.
All in all, GoPro cameras appeal to people taking pictures and videos in situations where their smartphones won’t cut it. But the problem for GoPro is that its addressable market appears not to be growing much, and it was always somewhat niche to begin with. Worse yet, Apple (AAPL) and other smartphones feature better cameras than ever.
GoPro posted around $1.6 billion in sales in 2015. Unfortunately, it has been nearly all downhill from there for GPRO, with its sales falling YoY in five out of the past seven years. The company did grow its sales by roughly 30% in FY21 as consumers spent heavily.
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GoPro’s revenue then fell around 6% in 2022 and it is projected to come in roughly flat in 2023. On top of that, its adjusted earnings tumbled around 48% last year and they are projected to fall another 72% to $0.13 a share in FY23, based on current Zacks estimates.
That said, GPRO’s sales are expected to bounce back in FY24 to the tune of 12% growth. Plus, its adjusted earnings are projected to rebound in a huge way as well.
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Bottom Line
Unfortunately for GoPro, its earnings outlook has already tanked as the economy normalized following the Covid chaos. The company’s adjusted EPS revisions continue to trend in the wrong direction. Plus, its most accurate/most recent estimate for FY24 came in 25% below the current consensus.
GoPro’s downward earnings revisions trends help it land a Zacks Rank #5 (Strong Sell) right now. GoPro also continues to face tons of competition from improving smartphones like Apple’s iPhone and beyond.
Any investors interested in trying to buy GPRO might want to wait until the company releases its Q2 results on August 3.
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