Go Short GoPro

Investors have been unsuccessfully trying to call GoPro’s (GPRO) bottom for quite some time. However, the stock has surprised almost everyone by its ability to continue moving lower. Despite GoPro’s massive fall from grace, the stock has more downside to offer, which is why I think investors can still short it.

Bad news for GoPro

With time, the tech sector is gradually being populated, as many small and big companies are entering in the industry with different ideas. There are many companies that are trying to survive in the industry with just a single idea, and GoPro is one such example.
Building a company with a single idea is a ruthless idea, as the market always demands the next big thing.

GoPro faced a lot of problems in the previous year, and has lost almost 80 percent of its market value throughout the last twelve months. This was mainly due to the slowing camera sales, delayed launches, overpriced products, and extravagant buybacks. GoPro’s sales also declined 50 percent in the reference period. Furthermore, GoPro also blundered by postponing the launch of its new drone named Karma, as it could have really enhanced sales in the first half this year.

It is clear to everyone that Google and Facebook are putting lots of effort in to enlarge the appeal of virtual reality camera rig partnerships and 360-degree videos. Facebook is focusing on the high-end gaming market with the help of Oculus priced at $600 which also needs a $1000 computer to get paired, whereas Google is focusing on mainstream market with the help of cardboards, which works on almost every smartphone with some basic sensors.

Therefore, to achieve the goal, Google formerly partnered with GoPro to develop the expensive 16-camera rigs for its jump virtual reality platform for YouTube. GoPro frequently emphasized its early mover’s gain in the virtual reality segment, but Google recently publicized that it has also signed deals with Yi Technology and IMAX to introduce new rigs for Jump. Google believes that it can rely on a single camera manufacturer – GoPro, which sells its products at superior prices.

Google’s partnership with Yi Technology and IMAX will certainly have adverse effects on GoPro. Apart from these, virtual reality is at its infant stage, and the companies that are being over dependent on the virtual reality platform should keep in mind that the total available market for virtual reality capture devices is much less that it predicted.


GoPro was a one-hit wonder and with camera sales declining, there’s no limit to the stock’s downside even now. The company’s drone initiatives will likely fail due to extreme competition from giants like Google. Despite the fall, GoPro is still a short.
Published on Jun 7, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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