GoPro, Inc.'s (NASDAQ:GPRO): GoPro, Inc. develops and sells cameras, mountable and wearable accessories, and subscription services in the United States and internationally. On 31 December 2019, the US$336m market-cap posted a loss of -US$14.6m for its most recent financial year. Many investors are wondering the rate at which GPRO will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for GPRO.
According to the 5 industry analysts covering GPRO, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$20m in 2021. Therefore, GPRO is expected to breakeven roughly a couple of months from now! What rate will GPRO have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 74%, which is rather optimistic! If this rate turns out to be too aggressive, GPRO may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of GPRO’s upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with GPRO is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in GPRO’s case is 64%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on GPRO, so if you are interested in understanding the company at a deeper level, take a look at GPRO’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further research:
- Valuation: What is GPRO 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 GPRO is currently mispriced by the market.
- 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 back ground.
- 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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.