Dear Mr. Berko: GoPro looks like fun. Our neighbor's son showed us photos for over an hour (a little too long) of his skiing trip, and some of the video looked fantastic. He says GoPro is the latest trend, and our 32-year-old son and his wife may buy a GoPro device. What can you tell us about the stock? I'll buy 2,000 shares or so at $4.91 if you think it's a good deal. — NE, Vancouver, Wash.
Dear NE: When you're part of a group photo and someone shows you a color print, whose face do you look for first? Yours, of course! Do you know that the personal pronoun "I" is among the most often used words in the English language? Americans have much higher levels of self-importance than those in any other nation — rightfully so. Resultantly, we're more self-centered than citizens of other countries. And surfer/businessman Nick Woodman, founder of GoPro, realized that he, like many Americans, would go blithely bonkers if he could view video of himself ski jumping, off-road motorcycle racing, parachuting, bungee jumping and doing other extreme activities. Americans are narcissistic, and Woodman designed a product that reciprocates. GoPro!
GoPro (GPRO-$4.91) came public in the summer of 2014. Almost 9 million shares were sold to IPO-crazed investors at $24 by J.P. Morgan, Citigroup and Barclays. Within a few days, the stock had been hyped to $98 a share in a buying frenzy of stupids who thought they were acquiring gold at a discount. During the next 18 months, GPRO collapsed by over 90 points as speculators realized that what looked like gold was iron pyrite.
GPRO has more cameras and accessories to choose from than my grandmother has tattoos. Its versatile selection allows users to capture immersive and engaging footage of themselves participating in adventurous and adulterous activities. One of those numerous GPRO cameras, depending upon your level of sophistication, can cost between $160 and well over $1,000. And that's without the extensive mounts and accessories that can ratchet up the cost of your device. GPRO's unique HERO5, HERO6 and HERO7 cameras are cloud-connected devices with cloud-based storage solutions. They can be loaded with numerous apps that allow for livestreaming and voice control, and users can store, preview, edit and share content.
GPRO, located in San Mateo, California, began selling hand-held and mountable cameras in 2004. The company now has 1,300 employees, and its products are sold in over 25,000 retail stores in 100 countries. Revenues peaked in 2015 at $1.6 billion and commenced declining in each of the following three years, to an expected $1.1 billion this year. During the past three years, GPRO has lost over $600 million, and Wall Street expects it to lose about $40 million in 2019, though revenues are expected to increase slightly, to $1.2 billion. GPRO has some heady competition from Panasonic, Sony, Nikon, Vivitar, Samsung and JVC. These are well-capitalized companies, and GPRO's management will have to burn barrels of midnight oil to keep the office doors open in San Mateo.
Though it sells righteous products, GPRO is not a growth stock. In addition to themselves, Americans love fads. GPRO is a fad, and the surrounding excitement is fugacious. Sooner than later, today's consumers will satiate themselves, and tomorrow's consumers will become obsessed with another entertainment craze. GPRO's a one-product company and a onetime phenomenon, and Woodman was one time in the right place at the right time.
Its balance sheet needs help, and if GPRO isn't merged into another company within the next several years, its business model may disappear into the ether. Still, management has reduced its costs, and several new products, including image stabilizers and an updated subscription service, will help the bottom line for a few years.
Buy the stock, but only as a short-term investment. Some pros think GPRO will return to the $9-$11 level in the next dozen months, and two firms, Market Edge and Ned Davis Research, have "buy" recommendations on the stock.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.