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The Recovery Of GoPro

Summary

GoPro had a loss of 373 million in 2016 due to many issues with their products.

Revenue in 2017 is expected to be 208 million.

GoPro offers a lot of successful products like the Hero5.

GoPro has a major lead over competing brands, and if they can create success they will be a great company to invest in.

GoPro had an awful year in 2016, because of failures and glitches in their products. The fourth quarter earnings were not looking good, it turned out GoPro operated at a loss of $373 million for the year.

Revenue: 

GoPro is expected to report revenue of $208 million, compared with $184 million in the year-earlier period, according to the FactSet consensus. GoPro fell short of analyst revenue projections in the past two quarters, but surpassed both in the three quarters before that. In March, GoPro said it expects first-quarter revenue to be “in the upper end” of its previously announced range of between $190 million and $210 million.

GoPro stated that majority of its second-quarter revenue was generated in markets outside of the United States, with sales of its higher-priced cameras, including the Hero5 Black, rising 13%.According to GoPro, its premium camera, the HERO5 Black, was rated the best-selling camera in the United States (SPY) for a third consecutive quarter. GoPro’s Karma drone was the number-two-selling drone in the country.

During the company’s 2Q17 earnings call, CEO Nicholas Woodman stated that “our second quarter performance capped a strong first half of the year for GoPro, where brand engagement, consumer demand, and sell-through of our products were better than expected.”

Why to Invest in GoPro:

GoPro has a significant lead over competitors like Garmin Ltd. (NASDAQ:GRMN) and Eastman Kodak Company(NYSE:KODK). GoPro had three of the top five digital imaging products, according to NPD in the fourth quarter of 2016.

The action camera market isn't growing as quickly as it once was, but GoPro has a solid foundation upon which it can build. In 2017, management is hoping to bring GoPro back to breakeven; if they can, it could bring a strong recovery to the stock. And with a strong balance sheet, the company doesn't have to tiptoe around debt maturities to stay afloat as it develops products for the future. 

If GoPro can execute their planned success, its stock could be a great buy for investors willing to hold it long term. Since GoPro has a debt-free balance sheet they now have the ability for drones and VR cameras to be built. It could take years to see if the company can generate financial success from these markets, but if it can, the upside for the stock will be tremendous. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.