GoPro: Forget The Revenue Guidance, Buy The Gross Margins

Jun. 07, 2022 2:09 PM ETGoPro, Inc. (GPRO) StockTGT, GPRO22 Comments

Summary

  • The market punished GoPro after its revenue guidance for Q2 showed a low-single-digit decline year-over-year.
  • But, the company will expand gross margins year-over-year in the face of declining revenue, proving its strengthening subscription revenue business.
  • GoPro's valuation is already at lows with a single-digit P/E and under one P/S ratio, proving the market has already priced in weakness while gross margins expand.
  • Looking for a helping hand in the market? Members of Tech Cache get exclusive ideas and guidance to navigate any climate. Learn More »
The all new GoPro Hero 10 action camera short after its release.

SL/iStock Editorial via Getty Images

When GoPro (NASDAQ:GPRO) announced earnings several weeks ago, the stock dropped precipitously on disappointing revenue guidance. But the market missed the sustainable gross margins even as revenue will decline 4% year-over-year at the midpoint of guidance. Crumbling gross margins have been the Achilles

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This article was written by

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Joe Albano is a tech insider with a background and education in electrical and software engineering. He has a unique understanding of current technology and innovation trends as well as what companies are best positioned for future growth across all areas of tech, including AI, as he has called it accurately over the last several years.

Joe leads the investing group Tech Cache where he delivers industry insider expertise to those looking for the best long-term picks, trades, and technical analysis of tech and growth stocks. Features of the group include: access to Joe’s personal portfolio, 2-3 weekly investment ideas, a weekly summary and preview newsletter, watchlist stocks, an automated stock rating system, and live chat.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of GPRO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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