GoPro Inc  (NASDAQ:GPRO) has been an incredibly interesting stock to follow as of late. Unfortunately, it’s not interesting in a positive way. Ultimately, the stock is tanking, and for good reason. Today, we’ll talk about why GoPro is having such a rough time in the market, what we’re seeing from the stock today, and what we can expect to see from GPRO moving forward. So, let’s get right to it…

Why GoPro Is Tanking

If you look for the reason for the declines GPRO has been experiencing, it’s not going to be hard to find. Ultimately, earnings estimates are being revised, and the revisions are headed in the wrong direction. In just the past 30 days, GPRO has seen 3 analyst revisions pushing estimates downward for both full year earnings and current quarter earnings. Unfortunately, there has been no revisions in the upward direction. As a result, earnings expectations for the current quarter have fallen from $0.30 per share to $0.18 per share with earnings estimates for the full year falling from $0.81 per share to $0.69 per share. Although earnings estimate revisions are important to follow, it’s important to pay attention to why estimates are being revised as well.

In the case of GoPro, there’s good reason for the revisions. Over the past few quarters, earnings have missed expectations and continually falling. This is the result of a couple of major issues GoPro faces…

  • Target Market – The target market for GPRO is relatively small. Their cameras are designed for extreme athletes that want to capture their movements on film. Sure, this seems like a huge audience, but when it boils down, there’s really not much out there. In order to realize massive success, GoPro is going to have to come up with a camera that’s designed for the every day consumer. Until then, the company is figuratively putting the wrong bait on the hook and can’t expect to see any massive increases in sales.
  • Competition – When GoPro first launched its cameras, they were the talk of the town. No one had seen anything like it. However, over the years, things have changed in a big way. Today, many cell phone cameras can capture video just as well, if not better than GPRO cameras. Unfortunately, GoPro can’t seem to keep up with the mounting competition in the industry, bearing a striking resemblance to BlackBerry’s activities several years ago!

What We Can Expect To See From GoPro Moving Forward

Moving forward, I don’t have very high hopes with regard to what we can expect to see from GPRO. Unfortunately, with such a small target market and mounting competition in the industry, it doesn’t seem as though the company is going to be able to pick up sales any time soon. As a result, I’m expecting to see a continuation of negative earnings expectation revisions and downward movement on the stock. Until GPRO releases a product that’s fitting for general consumers, chances are that things aren’t going to change much. In the end, the company needs to produce a solid earnings report in order to improve the investor sentiment surrounding the stock. While this may happen at some point down the road, it doesn’t seem as though it’s going to happen any time soon.