GoPro Inc. (NASDAQ:GPRO) has hit troubled waters as the stock continues to plummet in a seven-day losing streak. The stock lost 5.6 percent yesterday to hit its lowest point since July 8. The descent continues today as the stock was recording a 2.30 percent loss to $49.40 as at 9:43AM EDT this morning. Shares have lost more than 15 percent so far this week.
It remains to be seen if the rumors about Hero 5 will be enough to halt the current decline in the stock. You’ll be hard-pressed to find a fundamental reason behind the fall in the shares of GoPro. However, analyst Tavis McCourt posits that the stock’s recent volatility to technical factors and rising concerns about its valuation might be the reason the market is driving the share price down. The shares of GoPro currently trade at a PE of 42X and it has a market capitalization of $6.56B.
Hero 5 to the rescue
If market reports are to believed, GoPro might actually be gearing up for market dominance in the video creation space when its Hero 5 camera hits the market next year. The GoPro Hero 5 had been slated for an October 2015 release but the firm is reportedly delaying it release until 2016.
It was reported that the delay of the Hero 5 launch was necessary as the firm seeks to officially make the device the most powerful videographic equipment in the world when it is released next year.
For one, GoPro seems to be a working out a strategy in which new gen cameras will be smaller than older gen products. For instance, the Hero 4 Session that was unveiled last month is 50 percent smaller and 40 percent lighter than earlier GoPro (NASDAQ:GPRO) Hero 4 models.
Now, rumors have it that Hero 5 will be about half the weight and size of Hero 4; yet, it will have better specs. More so, it is being rumored that Hero 5 will be cheaper than Hero 4 – a move that contrasts sharply with every norm in the tech industry about new product launches.
The cautious case for GoPro
The cautious case for GoPro (NASDAQ:GPRO) holds that Wall Street is not impressed with the stock but that the quality of its products could change the tide in its favor going forward. The firm outperformed the consensus estimate when it reported earnings of $0.35 per share on revenue of $419.9M above the consensus estimate of earnings of $0.26 per share on revenue of $395.2M in the second quarter.
However, the market wasn’t awed because GoPro is still more of a niche product that appeals to a core segment of action sports and outdoor enthusiasts. Nonetheless, McCourt opines that data from Google Trends suggests a strong interest in the GoPro brand. The firm might yet be able to endear itself to Wall Street if Hero 5 lives up to expectations.