GoPro is Heading Towards My $15 Price Target
PUBLISHED ON: Dec 11, 2015
GPRO) a short, I gave the company a price target of $15. Analysts at Piper Jaffray soon followed and reduced their price target for GoPro to $15 last month. I called the company a short at $29, and the stock is currently trading at just under $17. With the stock now closer to my original price target, I think investors can begin to start covering their short position.
Although the stock is still about 10% higher than my earlier price target of 15%, I think investors who have witnessed 40%+ profit can book some gains whilst waiting for the stock to fall more.
Don’t bet on a turnaround
With GoPro stock off considerably from its all-time highs of over $90, investors should consider buying the stock just yet as the company is not likely to reverse its fortunes and will continue its downwards trajectory going forward.
GoPro’s business was built on a fad and the hype surrounding the company is finally dying and the sales of its one-hit wonder product are slowing down considerably. Moving forward, investors can expect the competition to increase. The competitive threats are big headwinds for GoPro, which is why I think the stock will never turnaround.
Sony and Ion represent the biggest threat to GoPro. Currently, both of these companies command a market share of 8% and 12%, respectively, as opposed to 47.5% for GoPro. These companies will undoubtedly try to gain market share and being the market leader, GoPro stands to hurt from it the most.
I’m still pretty sure that GoPro will fall below $15, which is why I’d recommend investors to not close their entire short position. However, locking in some gains wouldn’t hurt.
I still think GoPro is overvalued as investors haven’t priced in the competitive threats from Ion and Sony. The stock is trading at just under $17 and has roughly 10% more room to fall. As mentioned above, I think investors can still initiate a short position in the stock, but people who shorted the stock when I first recommended it should close at least 50% of their short position and lock in the gains.