GoPro’s stock price has fallen over 90% since it reached its all-time high of $98 in 2014. With a current stock price of $8.58 as of April 2022, GoPro’s lack of innovation along with rising competition has dropped the price significantly.
Hi, my name is Larry. I bought my first GoPro HERO4 Black in 2014, just as GoPro’s stock was peaking. As a finance graduate, I’ve kept a close eye on GoPro’s stock over the past 8 years and am excited to share why the price is so low today.
In this guide, I’ll discuss why GoPro stock is so low, what’s going on within the company today, and what you can expect from GoPro in the future.
Keep reading to find out more!
The main reasons why a stock price drops for any company are a lack of growth, failure to deliver on promises, and increased competition.
GoPro Financial Overview
Let’s take a look at GoPro’s yearly revenue over the past decade :
- 2012: $562.02 million
- 2013: $965.74 million
- 2014: $1,394.21 million
- 2015: $1,619.97 million
- 2016: $1,185.48 million
- 2017: $1,179.74 million
- 2018: $1,148.34 million
- 2019: $1,194.65 million
- 2020: $891.93 million
- 2021: $1,160.08 million
As you can see, GoPro’s revenue peaked in 2015 and has been stagnant since then. Investors prefer to invest in growing businesses, so GoPro’s lack of growth has hurt the stock price substantially.
In addition to growth stagnation, GoPro hasn’t been profitable in half a decade, is debt heavy, and has lousy cash flow. Although GoPro stock isn’t soaring into triple digits any time soon, the company isn’t nearing bankruptcy and is still sustainable.
Failure to Deliver on Promises
Action cameras are a niche market with a small overall customer base. For this reason, it’s essential for GoPro to innovate to create a broader segment of customers. GoPro attempted to accomplish this by releasing the Karma drone in late 2016.
The drone market was heating up during this time, and GoPro wanted to take advantage of its position as the market leader in action cameras. However, GoPro’s Karma drone had a technical glitch causing the aircraft to lose its power. As a result, GoPro discontinued the Karma drone in 2018 and hasn’t made a new drone since.
At a price point of $1,000, the Karma drone was expensive and customers and investors were infurious because of GoPro’s poor technology.
GoPro lost $373 million that year and also lost a significant amount of market share to a rival competitor, DJI. Rather than spending time creating an innovative product that revolutionized the market, GoPro rushed the drone out and failed miserably.
Rising Action Camera Competitors
Although GoPro is the most well-known action camera brand in the world, it also has the highest price tag. For this reason, an influx of competitors has come into the market, with cameras priced at more affordable rates.
Notable competitors are Chinese brands DJI and Insta360. Not only do these brands produce high-quality cameras, but they also have more innovative products. For example, Insta360 sells the Insta360 GO 2, which weighs an astounding 26.5 grams. In comparison, the GoPro HERO10 Black is 153 grams.
There are also dozens of different knockoff brands that cost a fraction of the price of an official GoPro. I commonly read about how the knockoffs are relatively high quality, and the users are satisfied with them.
Even though phone cameras aren’t technically action cameras, they’ve progressed so much in terms of video quality. For this reason, certain people are willing to simply film content with their phones instead of buying a dedicated action camera.
All these factors contribute to why GoPro stock is so low and why its future doesn’t look very bright.
Will GoPro Stock Ever Go Up?
Although it may seem like GoPro’s stock is doomed, a few cases may contribute to higher stock prices in the future.
GoPro is currently focusing on increasing the subscriber count to its GoPro cloud services. Subscribers have full access to the GoPro Quik app, including unlimited cloud backups, auto uploads, premium editing tools, and exclusive savings.
As such, GoPro is offering $100 off its cameras if the customer agrees to pay $50 for an annual GoPro subscription.
Let’s take a look at GoPro’s subscriber count since 2017 :
- 2017: 130,000 subscribers
- 2018: 185,000 subscribers
- 2019: 334,000 subscribers
- 2020: 761,000 subscribers
- 2021: 1,610,000 subscribers
As you can see, GoPro subscriber growth is strong, it brings a tremendous amount of additional revenue to GoPro each year. With 1.6 million subscribers paying an annual fee of $50, GoPro generated $80 million just from its subscribers.
On another positive note, GoPro’s stock price is up around 400% since its COVID-19 lows of $2.00 in 2020. Unfortunately, GoPro’s financials in 2020 were terrible because the global economy suffered due to the pandemic. Furthermore, most countries were on lockdown, which means there wasn’t much demand for action cameras.
As lockdowns have been lifted, more people are excited to be back outside, travel, and film various types of content with an action camera.
GoPro has also lowered its operating expenses from 19% of revenue in 2019 to 12% of revenue in 2021. It’s been able to cut expenses such as SG&A and sales & marketing as well.
These factors all contribute to the bullish case of GoPro stock, and many investors see double digit stock prices in the near future.
Is GoPro a Good Stock to Buy Right Now?
It’s tough to predict what’s going to happen to GoPro stock. The action camera market is a very small niche for an extremely specific set of people.
Unless GoPro creates a new and innovative product that disrupts the market, we’ll unlikely see GoPro stock hitting a new all-time high.
However, it’s safe to say GoPro’s stock has a chance of slowly making its way into the teens. The new focus on its subscription-based model will please investors and bring new investors into the stock.
GoPro’s main issue is that it already plays in an extremely small market and continues to lose market share to new competitors and increased smartphone camera quality.
All in all, as an investor, I’d be looking for more exciting companies to put my hard-earned dollars into.
For those curious about GoPro’s stock forecast, you may have a few additional questions about it. So let’s discuss a few common questions I frequently see about GoPro stock.
Is GoPro losing money?
GoPro suffered negative net income from 2016 to 2020 but finally generated $371 million of positive net income in 2021. As such, GoPro isn’t losing money and is recovering from five years of stagnation. Moreover, GoPro is still a household name, and we shouldn’t expect them to disappear any time soon.
Does GoPro stock pay dividends?
GoPro is listed on the NASDAQ under the ticker ‘GPRO’. However, GoPro has never paid a dividend and doesn’t expect to declare or pay any dividends in the foreseeable future. Companies that don’t pay dividends are either trying to conserve their capital or are already under financial strain and cannot afford to pay any.
Is GoPro going out of business?
GoPro is not going out of business and performed well financially in 2021. In fact, 2021 revenue increased 30% from 2020, and GoPro’s cash and investments in 2021 grew 64% to $539 million . GoPro’s strong performance was led by its software and subscription-based model developments.
I hope you enjoyed this brief discussion about why GoPro stock is so low. In summary, GoPro’s stock has suffered the consequences of a saturated market. Furthermore, GoPro hasn’t been able to innovate any fresh new products.
Although GoPro’s stock is down 90% from its all-time high, it’s showing signs of life because of GoPro’s pivot to its software and subscription service.
Now I’d love to hear from you: Do you currently own any GoPro stock? What do you think is going to happen to GoPro stock price in the next few years? Is GoPro stock overvalued or undervalued?
Let me know by dropping a quick comment right below!
-  https://investor.gopro.com/financials-and-filings/Form-10K/default.aspx
-  https://d18rn0p25nwr6d.cloudfront.net/CIK-0001500435/92b5590f-e44c-457c-9c90-c48ce9db477f.pdf
-  https://www.wsj.com/market-data/quotes/GPRO/financials/annual/income-statement
-  https://investor.gopro.com/press-releases/press-release-details/2022/GoPro-Announces-Fourth-Quarter-and-Full-Year-2021-Results/default.aspx