GoPro (GPRO) Temporarily Stops Amazon Shipments, Shares Sell off

Shares of GoPro Inc (GPRO) were trading down $0.50, or 3.4%, to $13.80 per share in Thursday’s premarket after Piper Jaffray Companies (PJC) analyst Erinn Murphy noted that the action camera maker was currently not making shipments to, Inc. (AMZN).

GoPro stock closed at $14.30 per share, down 5%, in Wednesday’s regular trading session.

Here's what you need to know

Founded in 2004, California based GoPro Inc was originally named Woodman Labs Inc. for its founder, Nick Woodman.
The company develops and manufactures lightweight wearable high definition personal cameras generally used in extreme action videos. The cameras can be used in unusual situations and are often mounted on drones, planes, quadracopters, cars and army tanks.

The company’s product line includes three fixed lens cameras without viewfinders that are shockproof and waterproof to 180 feet or 60 meters, as well as accessories for wearing the camera while skiing, surfing or other sports.

GoPro had its IPO for $24 per share on June 25, 2014.

Late yesterday, analyst Erinn Murphy of Piper Jaffrey reiterated her “underweight” rating of the stock and $9 per share price target after highlighting that the company has stopped its shipments to which represents as much as 12% to 14% of the company’s sales.

The company clarified that it plans to resume shipments to Amazon, but only by the end of October.

According to Murphy, if GoPro resumes shipments to Amazon by the end of October or early November, the shortfall on revenue will be just less than $100 million.
GoPro (GPRO) Temporarily Stops Amazon Shipments, Shares Sell off
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Murphy stated that she was “incrementally concerned” about the company’s ability to attain its second half 2016 guidance since the Amazon disruption was not considered in GoPro’s guidance.

"This is a disruption of a key partner that we believe was not contemplated in guidance and we will continue to monitor the progress of this channel partner into the Holiday season," Murphy said.

The news follows the release of two new Hero camera’s and the company’s new Karma drone one month ago. The lack of Amazon shipments comes at a particularly sensitive time for GoPro, since a large part of the company’s yearly revenues are made in the fourth quarter holiday season.  GoPro has increased shipments through their own channel and to Best Buy Co Inc (BBY) among other partners.

Analysts expect GoPro revenue of $677 million for the fourth quarter, an increase of 55% from last year’s dismal results and higher than its 2014 results of $634 million. Despite revenue from its new Karma drone and a new cloud service, the recently released top of the line Hero5 camera is priced $100 lower than previous releases.

GoPro stock soared over $17 per share last month after the introduction of the Karma drone and new Hero5 cameras. Nevertheless, short sellers have driven the stock lower since the release of the new products. GoPro stock is trading considerably lower than its 52-week high of $31.33 per share and is still looking at an EPS of -$1.54.

The company will report quarterly earnings at the end of October.

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Published on Oct 13, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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