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GoPro, Inc.'s (NASDAQ:GPRO) Profit Outlook

Simply Wall St
·3 min read

GoPro, Inc. (NASDAQ:GPRO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GoPro, Inc. develops and sells cameras, drones, and mountable and wearable accessories in the United States and internationally. The US$974m market-cap company posted a loss in its most recent financial year of US$15m and a latest trailing-twelve-month loss of US$93m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which GoPro will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for GoPro

Consensus from 5 of the American Consumer Durables analysts is that GoPro is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$46m in 2021. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 104%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for GoPro given that this is a high-level summary, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. GoPro currently has a debt-to-equity ratio of 139%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of GoPro to cover in one brief article, but the key fundamentals for the company can all be found in one place – GoPro's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

  1. Valuation: What is GoPro worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether GoPro is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on GoPro’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.