GoPro Inc (GPRO) Short Interest Peaks, Stock Drops Below $24 IPO Price

gopro inc (GPRO)

GoPro Inc ’s stock fell below its IPO Price on Thursday as short interest peaked. Shares plunged 8% to close below the $24 IPO price for the first time ever. The maker of action cameras has had a terrible 2015, with shares down over 60% year to date. Most of that decline took place in the past three months as investors continued to bet that the stock was overvalued. As per data from FactSet, short interest as of Nov. 1 stood at a record 33.2M. That’s over four times the 8.2M reported a year ago.

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GoPro is Short Sellers Delight

Sungard’s Astec Analytics, which also monitors short interest data, said GoPro Inc was the hottest ‘short’ stock for the second week running, as demand to borrow against the stock now exceeds supply. For newbies to the market, a high short interest means that traders and investors are placing bets that the stock will fall.

With such high short interest, “any little indication that things are going south causes concerns about the stock,” Ben Bajarin, an analyst at market research firm Creative Strategies, said.

“They’re all sort of looking for the worst-case scenario,” he added.

Wedbush analyst Michael Pachter reckons short sellers are confident the stock has much more downside.

“The stock can’t get out of its own way,” Pachter said. “People absolutely detest it.”

Can GoPro Turn the Tide?

GoPro Inc  has been in free-fall since Aug. amid lackluster demand for its new Hero 4 Session. Piper Jaffray downgraded the stock on Oct. 29, with analyst Erinn Murphy claiming that demand does appear to be waning. Matters worsened last week when rival Polaroid filed a suit, saying the Session infringed on its patents.

Critics have declared GoPro a passing fad and questioned its ability to grow its user base. With the holiday season fast approaching, the next few weeks could be make or break for the stock. Will it be able to prove skeptics wrong, and turnaround the slowdown in sales? The odds of that happening are low, after GoPro last month provided its holiday quarter outlook that equates to an almost 17% year over year drop in sales.

Bajarin however feels enthusiasm among GoPro’s most active users is still strong. Therein lays its best opportunity as GoPro launches its new line of drones and virtual-reality devices.

“Satisfaction level with is still pretty high for consumers who have them and use them,” Bajarin said. “But Wall Street wants to see sales trends going up, not flat or going down.”

Shares of GoPro Inc  closed Thursday at $23.15.

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