March 16, 2017
Today, GoPro Inc.'s (GPRO) shareholders are breathing a sigh of relief. Despite wave-after-wave of analyst cuts, the sports camera maker announced that it expects first-quarter revenue to be at the higher end of its forecast of $190 million to $210 million. The company also mentioned that it is cutting 270 jobs in an effort to become profitable.
GPRO shares spiked 12% on the news. But after a series of disappointing earnings announcements, can GoPro really turn itself around in 2017? Let's find out.
As a refresher, GoPro is known for its leading line of action cameras, HERO, which include small, lightweight and waterproof cameras that can be mounted on your gear (like bike helmets, vehicles, kayaks, etc.) or strapped onto your body (arms, legs or hands).
In addition, GoPro offers a slew of premium accessories, including The Strap (which mounts cameras to your body), lenses, camera cases, rechargeable batteries, LCD Touch BacPac, screen protectors and more. The company also recently broke into the drone market.
GPRO made waves with its IPO in 2014, but it has been a rocky road since then. The stock has plunged a staggering 77% since it went public less nearly three years ago. In the past year alone, the stock is down nearly 33%. So GoPro has a lot of lost ground to make up.
Unfortunately, I just don't see GoPro making a big comeback in 2017. Even if it's able to live up to analysts' expectations, GoPro is slated to post single-digit sales growth for the foreseeable future. And the company isn't expected to become profitable any time over the next two years.
So while the company slashed its workforce by 15% in November, and it's slated to cut another 17%, the company will still likely struggle. The action camera market is becoming more competitive, and GoPro isn't performing up to speed with its new line of drones.
Keeping this in mind, I rate GPRO a D-rated Sell in Portfolio Grader. While GPRO shares are rallying today, I just don't see a lot of upside potential for this stock.