GoPro Stock (GPRO) Gasps On Negative Q4 2015 Revenue Forecast

GoPro (NASDAQ:GPRO) Hero 4

GoPro Inc (NASDAQ:GPRO) shares continued to tumble on January 15 following the announcement of job cuts and a negative earnings preannouncement for Q4 2015. GoPro shares were down by 6.81% to a low of $11.63 per share during regular trading hours after plunging 25% on the previous day. The firm has seen a 73.73% drop in its stock over the past 52 weeks, closing below its IPO price of $24 on November 12.

GoPro (NASDAQ:GPRO) Hero 4

According to preliminary financial results reported by Go Pro Inc (NASDAQ:GPRO), Q4 revenues are expected to be around $435mn, well below the average analyst estimate of $510.9mn by Bloomberg. Full year revenue is expected at $1.6bn, against a forecast of $1.69bn.  The firm also announced a 7% slash in its workforce, terming the decision as a step to better align its resources to key growth initiatives. It will officially release its financial results for the Q4 2015 and FY2015 after the market closes on February 3, 2016.

The California-based camera-maker, which makes high-end action cameras for extreme-action videography, has gone from being a hot favorite with Wall Street to a firm struggling to sell its products. Not too long ago, GoPro camera videos were everywhere on social media-  used by surfers, skiers and thrillseekers to record their exploits, bird’s eye views of vast landscapes by strapping a GoPro to a drone or a real bird. The firm, which launched its IPO in June 2014, has led to huge disappointment for its investors. Goldberg Law PC has announced a securities class action lawsuit against GoPro Inc (NASDAQ:GPRO), alleging that GoPro issued false and misleading statements  regarding sales of its Hero camera range.

The Future for GoPro?

GoPro Inc (NASDAQ:GPRO) has blamed lower-than-expected sales of its capture devices for the poor revenue forecast. The revenue figures include a $21mn reduction for price protection related charges, due to repricing of the HERO4 Session in December 2015. The palm-sized camera had received mixed reviews and GoPro was forced to cut its price down to $199.

Suranga Chandratillake, a partner at Balderton, an investor in companies such as Betfair, Wonga and The Hut, feels that overreaction in public markets due to one product not selling is typical for technology companies. This is the reason why ‘many big tech companies, such as Uber and AirBnb, are choosing to stay private. It allows them to stay agile, build for the long term,’ says Chandratillake.

Rumours of an acquisition by Apple have been doing the rounds for quite some time. Speaking to Benzinga, tech stock expert Sean Udall says that GoPro Inc’s (NASDAQ:GPRO) market cap has dropped so much that it will likely face a hostile takeover now. ‘My view is they probably won’t get that long of a runway. Instead, the company will probably be subject to a hostile takeover as that would be the cheapest way to acquire it,’ said Udall.

However, speculations have been rife about a new Hero 5 camera being developed by the firm that will be equipped with a special camera housing. The Hero 5 would be capable of capturing images to depths as low as 60 meters (the Hero 4 can do only 20 meters), as well as record 8K videos. According to a report by CrossMap, the GoPro Hero 5 would be able to fit inside the company’s first consumer drone- the Karma drone, and is touted as being the first Navy-seal like camera. The Karma drone is expected to be released in 2016. It remains to be seen whether the impending release of the new drone and rumored Hero 5  camera can lift GoPro Inc’s (NASDAQ:GPRO) diving fortunes.

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