Shares of GoPro Inc. (GPRO) went on a roller-coaster ride this Friday, closing up about 0.9% after sinking in pre-market trading following its most recent quarterly earnings report, which fell short of analysts' forecasts. At $5.55, GPRO stock reflects a near 27% decline year-to-date (YTD), and a whopping 49.4% plummet over the most recent 12 months. As the San Mateo, Calif.-based firm struggles in its two years as a publicly traded company, the Street remains conflicted over its turnaround prospects.
In the fourth quarter, GoPro blamed its third consecutive holiday season shortfall to poor pricing decision on its new camera. That being said, investors weren't expecting much of a spectacular report, given that GoPro had reduced its outlook consecutive times over recent months, alongside announcements to lay off hundreds of employees and cancel its Karma drone. GoPro posted a Q4 loss of $0.30 per share on revenue of $340 million, below its original projection for $470 million in sales and the last guided $340 million.
'Limited Catalysts' for Camera Maker
Analysts at JPMorgan cut their rating on GPRO to neutral following the report, noting that while its "brand, channel and category-dominance remain compelling building blocks for a recovery someday" the firm "hasn't made the ease-of-use breakthrough that will spur growth, and we sense that the 2H18 product cycle will deliver only incremental improvement in the experience." As a result, JPMorgan's Paul Coster cut his estimates, warning on a "tough road back to profitability and limited catalysts" facing the action-camera maker.
Despite its issues, GoPro still has 80% of the action camera market in the U.S. In the most recent quarter, it saw unit sales grow near 20% and 96% year-over-year (YOY) in China and Japan. Cost cuts, including the reduction of its CEO's cash compensation to just $1 for the whole of 2018, and a new $5 monthly subscription service have also been highlighted as presenting upside for the camera company.
"Despite the negative cloud, we see GoPro as closer than ever to achieving its ultimate vision since IPO: to be a maker of high-quality capture products, with an accompanying app software that both maximizes hardware potential and simplifies the content creation process," said Oppenheimer analyst Andrew Uerkwitz in a note on Friday.