GoPro's Turnaround Is NOT Happening

GoPro's (GPRO) fad has died a lot faster than even some skeptics were expecting. The company is already reporting weak sales and I expect the weakness to continue because of the growing competition. For this reason, I think GoPro is still not a good buy and the company's turnaround chances are next to zero.

2015 was an awful year for GoPro as the stock lost over half of its value and 2016 hasn't proven to be any better. Recently, Apple and drone king- DJI decided to work together which definitely will be the reason to shift spotlight from GoPro’s Karma.
Apple detailed that it will supply new retail displays for DJI’s Phantom 4 drone. These new displays comprise of big signs, hands-on demo models, as well as huge shelf space for DJI’s drones and accessories.

On the other hand, DJI employees will attend customers on selected Apple stores to provide hands-on drone training session. Instead of using GoPro’s cameras in its $1,400 Phantom 4, DJI used its own wide-range 4K camera and sensors. DJI’s Phantom 4 features auto-follow, object avoidance, and autopilot skills.

The DJI displays signifies Apple’s largest promotion of third-party devices ever, and place emphasis on the rising popularity of DJI’s leading drones. Apart from this, it also creates problem for GoPro, which perilously needs its forthcoming Karma drone to efficiently compete contrary to DJI’s prominent drones.

GoPro has been struggling with slothful demand regarding its action cameras. In 2015, the company stated that it would enter the drone market mainly due to the slothful demand of its action cameras. GoPro promises to release its Karma drone anytime in the first half this year, but it has meanwhile launched just two teaser videos with no technical information. If the Karma fails to meet the public expectation and to amaze drone users, the company’s sales could decline even further as compared to the 15 percent drop consensus anticipate this year.

GoPro dominated the action camera segment being the first company to make a great move. With time, other companies entered in the race with highly competing products. And now, Apple is boosting DJI’s status with big store promotions, GoPro could be missing its opportunity to grasp a significant share of the drone market.

Conclusion

Due to the increasing competition, the chances of GoPro's upcoming products reversing its sales trend are pretty low. It is safe to assume that the company's fad has faded away and the stock doesn't make for a good buy despite the recent beat down.
Published on Mar 25, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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