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In Hindsight: The Philosophy of GoPro

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November 06, 2016 – Comments (0) | RELATED TICKERS: GPRO , FIT

As of the end of this past trading week, GoPro’s($GPRO) value is down 88% since its apex in October 2014. Aching from another quarter of missed estimates(revenue of $240.6 million and EPS of -$.60), the tech company has struggled to gather their footing. But what’s behind these suboptimal numbers? For me, it comes down to two factors: product demand regression and increasingly strong competition.

In regards to action cameras, Nick Woodman’s initial vision was that of supreme innovation, a camera that could capture the most extreme moments like never before, in both high definition and with unmatched dependability.. Their first Digital Hero was a revelation, no doubt, but as new, more technologically advanced iterations were being pumped out yearly, a sense of redundancy came over me. What if by the time the Hero 3+ was released in early 2014, everyone that wanted a GoPro already had one? Not everyone lives the adrenaline induced life of a Red Bull athlete; I’ve owned a GoPro for several years, a timespan in which it has been used minimally, as the times and tribulations of suburban New Jersey are not up to par with typical footage. Maybe I’m being too introspective, but the philosophy of owning an action camera has always come off as a trend or one-trick pony of sorts to me, similarly to a product like a FitBit($FIT). Interestly, from a surface perspective, the stocks move practically in tandem(as pictured below via Yahoo Finance), but I digress.

What may have been GoPro’s greatest adversary is that while they once owned and essentially created a narrow market, that niche is now filled in excess with price competition and varying levels of product quality. Though tech companies like TomTom, Olympus, and Sony have all produced their own version of a sleek action camera, to be fair to Woodman, GoPro has greater exposure. But quality amongst action cameras is becoming so similar that choosing a more financially responsible camera almost seems like a no-brainer.

But it’s not all about action cameras at their headquarters in San Mateo; several months ago, GoPro announced the Karma drone, a compact, quick, and sleek product that, on paper, should sell well given the drone renaissance we’ve been experiencing over the past year or so. Well, that would be the case, if the market for drones wasn’t so incredibly saturated. For Karma to thrive, GoPro would have to release a product truly special, one that clearly separates itself from its rivals,  which may not be the case, as reviews have claimed it to be fairly mid-tier in regards to other drones. As aforementioned, their market exposure could and should give them somewhat of a boost this holiday season, but who knows; next quarter’s report should shed some light on this sentiment.

The consumer philosophy that I describe is anecdotal, sure, but the company’s valuation since their IPO peak reeks of a company, or rather a product, that consumers are growing impatient, but more importantly, rather bored with.

 

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