GoPro Stock Killed by Earnings Report
After a day of solid gains for GoPro Inc (NASDAQ:GPRO), a missed earnings report dropped GoPro stock by nearly 13%.
The company reported $540.0 million in fourth-quarter revenue with a net income loss of $0.82 a share, falling below analyst expectations. Things only got worse in year-to-year comparisons. GoPro stock netted 26.8% down in 2016 from 2015. (Source: “GoPro stock crashes more than 10% after failing to meet Wall Street’s expectations,” TechCrunch, February 2, 2017.)
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The company made a note to specify that the $0.82 per share loss includes the charges of $102.0 million for full valuation allowance on U.S. deferred tax assets and nearly $37.0 million for restructuring costs.
But it’s not all doom and gloom for GoPro stock. The company said that the previous quarter generated the second-most revenue in the camera and drone maker’s history. The new model of its staple product, the mounted camera “HERO5 Black,” was the best-selling digital imaging device in units and dollars.
And the company’s plans to launch drones failed to get off the ground as the company had to recall the “Karma” drone from the market, but yesterday announced that the autonomous flyers were back in the air, once again available to consumers.
GoPro also made a note off its Instagram following, which has surged by 53% year-over-year. The numbers look even better when considered internationally. The company saw 245% more social media followers from outside the U.S., while its social media views also increased by 40%. YouTube also experienced a boost, with 86% more viewers in 2016 versus 2015.
GoPro stock had recently had a run of good news, before the disappointing earnings report.
Pacific Crest Securities analyst Brad Erickson had raised estimates for GPRO stock’s drone shipments up to 150,000, which would result in a revenue contribution of $88.0 million for FY2017, according to his projections. This prediction had sent GPRO stock surging at the time. (Source: “GoPro (GPRO) Drone Shipment Estimates Raised At Pacific Crest,” StreetInsider, January 24, 2017.)
Erickson didn’t only have good news for GPRO stock, however, saying that the company would experience losses and burned cash in 2017, but he believes that GoPro management could hedge against these negative outcomes by further reducing the company’s workforce. Here’s part of Erickson’s statement that led to to that recent surge in GPRO stock:
In light of better-than-feared sell-through, we are raising our unit estimates by a bit more than 10% to 2.1 million units in Q4 from 1.9 million and are raising our ASP estimate slightly as our store checks showed an impressive ability to pivot point-of-purchase displays to selling the Karma Grip ($300 electronic stabilizer) when it became clear the Karma would not be launched. Further, we are removing Karma from our Q4 estimates and now expect volume shipments to begin in 2Q17.
(Source: Ibid.)
Still, issues persist over the company’s future direction. With a very specific product for a very specific market (and not much value in terms of upgrades from one generation to the next) and analysts are concerned that GoPro stock has simply tapped out its consumer base. With shares falling today as a result of another weak quarter, only time will tell if GoPro can right the ship going forward.
