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Shares of US tech company GoPro (NASDAQ: GPRO) are in the red today after closing at $ 9.57 on September 17e, (19:36 UTC-4). Shares have fallen by more than 85% since its debut in 2014, despite being the leading company in the action camera industry. Investors have always viewed the GoPro as too one-dimensional. However, that is set to change following a series of announcements the company has released since 2020.
GoPro – Technical Analysis
According to the financial statement released by GoPro, the market capitalization of the company is $ 1.473 billion with total assets worth $ 757.944 million. Revenue for 2020 was $ 891.92 million with a profit margin of -7.49% compared to $ 1.19 billion in 2019.
Moving averages for GoPro such as exponential moving average (10) (9.63), simple moving average (10) (9.59), moving average (20) (9.77), simple moving average (20 ) (9.80) and the exponential moving average (30) (9.91) indicate a sell action. On the other hand, oscillators such as the relative strength index (14) (43.06), the stochastic% K (14, 3, 3) (38.78), the commodity channel index ( 20) (−69.87), the average directional index (14) (16.66) and Awesome Oscillator (−0.53) are neutral.
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Recent developments
GoPro has already made unsuccessful attempts to get into the media and failed in the drone market. GoPro has launched several new initiatives since 2020 to shake things up. It introduced a direct-to-consumer business on its website rather than selling its cameras at a wholesale price through retail channels. The website has accounted for over 50% of sales in the past 12 months. GoPro’s gross margin increased 950 basis points year-over-year in the second quarter, reaching 39.8%. In addition, the company’s new subscription business offers a gross margin of between 70% and 80%.
GoPro has introduced a subscription service for loyal customers where they can unlock a range of new features and benefits, including replacements, unlimited cloud storage, and product discounts. The subscription costs $ 49.99 per year and is expected to generate recurring income of $ 90 million in 2022. The company’s net income has also grown steadily despite a declining trend in revenue over the past 4 years.
GoPro aims to entice its customers to buy direct while adding subscription services that can be sold at a high margin. Experienced GoPro users have been drawn to the cloud storage, editing tools, and even upgraded accessories that have created subscription products. However, this business transformation can also have its limits. There are limits on how much revenue the business will be able to make if it cannot increase sales volume.
Should you buy GPRO shares?
GoPro stocks are not long term growth stocks and they won’t add much value to investors even if they are profitable now. The company has made some positive improvements such as a shift to more recurring subscription revenue and a general shift to power users with higher margins. While the business is no longer focused on growing volumes, there are limits to how it can serve a niche market.
The appeal of the GoPro has always been its ability to attach cameras to unconventional places and angles to capture amazing views. The company must find a way beyond its line of HERO action cameras, such as the wearable device market. However, the company has failed to penetrate adjacent markets in the past. Thus, investors do not have the confidence to be successful in a market other than their own. Investors can look beyond these stocks for now, but can add them to their watch list.
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