GoPro Inc (NASDAQ:GPRO) isn’t finished yet. Investorplace.com feels that competition isn’t necessarily a bad thing for GoPro stock. It had sold off on Wednesday, spurring people to once again speculate about the firm’s potentially looming demise. The spark for the GoPro stock sell-off was a competitor called DJI. It announced a new drone that will compete with GPRO’s own forthcoming model.
DJI’s drone stands out because it’s a smaller option. The Mavic Pro, as it’s called, can fold to be as small as a water bottle, as per the firm. ‘The Hindu’ said that ‘DJI steals Karma’s thunder with tiniest drone yet’. DJI’s Mavic Pro drone can be folded down to the size of a water-bottle. This is as per an image posted on The Verge. GoPro’s stock has been sent plummeting by DJI’s new water bottle-sized Mavic Pro. This is even as less than a week has passed since its entry into the drone market. But comparing and contrasting the specifications of DJI’s drone and GoPro’s drone would almost fully miss the point, Investorplace.com says.
GoPro Inc Stock Investors Need Patience
The drop in GoPro stock on Wednesday reminds us of a popular trend. It is easy for investors to get distracted by the trees and miss the entire forest. Knee-jerk reactions to news headlines like product releases are not a sound investment strategy. They are even less sound indicators for a firm’s prospects. The fact that competition is a huge factor for GoPro stock is hardly news. Increased competition is coming on the camera side from smartphones like Apple Inc.’s iPhone 7. Now there are also newer gadgets like SnapChat’s spectacles. As such, GPRO’s foray into the hot drone market has been highly anticipated.
But to freak out because that market, too, has competition is more than a little bit backwards. The announcement from DJI arguably proves the market. It also proves prospects for GoPro Inc (NASDAQ:GPRO)‘s drone as much as it should raise concerns for fans of the firm. Indeed, the GPRO drone has actually been impressively received so far. This is something that must be taken into consideration before panicking at the thought of a competitor. During the Q2 2016 earnings call, it was already shared that ‘Karma’ would be launching this year.
Analyst Decides to Wait and Watch
Tavis McCourt of Raymond James spoke positively of GoPro’s drone announcement. He noted that search volume was strong after the firm revealed the pricing for its Hero 5 camera. At the same time, the firm also shared when the camera would be available. This applied for the Karma drone as well. More specifically, he wrote: “We will see how sustainable the search volume growth is over the next few weeks. But, we suspect enough marketing buzz has been created to generate meaningful demand for Hero 5 and Karma. The most likely risk to this assessment is if the products launch with some quality issues. This may invite bad press and/or consumer reviews.”
Meanwhile, others have been applauding the technical differences of the drone. The most recent earnings released by the firm were once again less than stellar. So, in many ways, the GPRO drone has been one of the brightest spots for the firm in some time. Yet, many investors are looking at it backwards. So, GoPro Inc (NASDAQ:GPRO) stock serves as a reminder that reacting to news announcements like competitive product releases is not ideal. It is just going to blur your vision with regards to making a sound, substantive assessment of a potential investment.