GoPro, Inc. (GPRO) shares rose more than 4% during Friday's session after the company announced record e-commerce sales over Memorial Day weekend. The revenue growth was primarily driven by its flagship HERO8 Black product, although GoPro also debuted the $69.99 Zeus Mini mountable light.
The move underscores a shift toward the company's direct-to-consumer approach that delivers higher gross margins and a lower threshold to reach profitability. Management expects sell-through of 600,000 to 650,000 units during the second quarter of 2020 as global demand continues to increase.
Last quarter, the company reported half of the revenue that it generated a year ago. EBITDA losses reached $41 million during the quarter, compared to $1 million a year ago, with gross margins standing at about 34.2% of sales. The good news is that subscribers grew 14% quarter over quarter and 69% year over year in the first quarter of 2020.
Management believes that GoPro.com will represent the majority of its revenue by next year, with target gross margins of between 38% and 40%. Last year, GoPro.com generated only about 10% of sales, but management expects that revenue share will jump to 45% this year.
From a technical standpoint, the stock moved to retest reaction highs made during Thursday's session. The relative strength index (RSI) remains in overbought territory with a reading of 72.46, but the moving average convergence divergence remains in a bullish uptrend. These indicators suggest that the stock could see some consolidation before a move higher.
Traders should watch for some consolidation above trendline support at $4.40 over the coming sessions. If the stock moves higher, traders should watch for a retest of prior highs of near $5.00. If the stock moves lower, traders could see a move lower toward the 200-day moving average near $3.87, although the overall trend remains higher.
The author holds no position in the stock(s) mentioned except through passively managed index funds.