Shares of the GoPro action camera have experienced quite an intricate route. In the month of June the value of one share was equal to 24 US dollars. Then the stock value jumped to 50 US dollars only to fall to 38 US dollars.
This fluctuation might not be very appealing to investors and companies wanting to buy the business. There are some reasons behind the fall of the Go Pro Stock. Unfortunately, the fall might not stop here.
First Reason: Go Pro is not a media company
Go Pro has tried to make a name for itself as a media company. However, at the end of 2013 the company did not obtain revenue from the distribution and social engagement on the GoPro network.
On the other hand, YouTube managed to get revenue equal to 3.5 billion US dollars. However, it has to be admitted that the sum dropped to 1.5 billion US dollars after making payments to various partners.
Second Reason: Growth does not represent much
GoPro is not exactly a high growth business if one makes a comparison between the first two fiscal quarters of the present and last year. In 2014, the company experienced a 11.1% increase in its revenue. It is a good rate but not outstanding.
What is quite strange is the fact that the company was quite profitable before its IPO. Unfortunately for it, the trend has changed direction. In the fourth quarter of 2013 the company had a profit of 50 million US dollars. The first quarter of 2014 was not flourishing at all, bringing the company a profit of 11 million US dollars. But this was nothing in comparison with the 20 million US dollars lost during the second quarter of 2014.
Third Reason: Is the product that unique?
GoPro has to pay attention to its rivals. Ten years ago digital cameras were star products. But the incorporation of cameras in mobile devices has lowered the sales of the once so popular product. It is true that the camcorder market is getting better and better and GoPro has had a great contribution. However, every smart phone iteration brings the possibility to enter GoPro’s territory. The company has managed to cover a niche in the market of camcorders. GoPro has a market share equal to 11% in December 2011 while in December 2013 its market share was equal to 45%. Giant companies like Apple or Samsung might decide one day to focus their attention on making smart phone cameras usable in various extreme conditions.
GoPro could experience some real problems if huge companies decide to step in the game. But the company teamed-up with Microsoft for the S-1. For the time being Microsoft is working on making some video stabilization algorithms to function with the GoPro camera.