Julie Lamb

About the Author Julie Lamb

Julie graduated with a Bachelor of Arts in English with a focus on creative writing from the University of Louisville.

GoPro Inc (GPRO): Revisiting The Bullish Thesis

GoPro Inc (NASDAQ:GPRO) admittedly had a bit of an uphill 2016. The Karma Drone suffered a misstep when consumers found these drones were losing power mid-flight. Therefore, instead of what could have been a massively profitable holiday season, the action camera giant found itself having to issue a recall in November.

Positives for GPRO: It was a mechanical battery-related mistake caught early in the launch, as thankfully just a small number of drones had shipped. Though the launch was cut short, the giant has worked hard to correct the glitches.

In fact, 2017 will be the year for GoPro, and its Karma drone, to soar once again. At the Consumer Electronics Show held earlier this month at the Las Vegas Convention Center, GPRO CEO Nick Woodman announced at the annual global gathering spot for gadget-enthusiasts that the Karma is set to re-launch this year across the world under the name of GoPro Karma Core, a “complete replacement” that will not nosedive.

Not only is this a newer, improved version, but the retail price tag is cheaper at an attractive $399 vs. $799. If the drones can capture video with an algorithm that keeps the Karma Core safely in-flight, sentiment on the Street should soften on the giant.

Expectations right now are low after GoPro’s rocky third-quarter revealed revenue suffered a 40% decline. As a result, the giant had to scratch its full-year estimates and drop about 200 full-time workers from its force. Yet, the management team remains positive about 2017 to be its comeback year, predicting growth to resurge to double-digits. Analysts are certainly hesitant on the giant amid its struggles; but there is room for upside if GoPro can trounce near-term expectations.

GoPro’s success has hinged on its camera business dealings. With the enhanced drone, if it stays in the sky, the company can add the drone market to its sphere, branching out to build a new customer base. That’s just the first hurdle. Once the drone proves it can survive the danger of recall, next the team can work on taking on the rest of its rivals; and the company certainly has the potential technology tools to blow the rest of its competitors out of the water.

Meanwhile, another solid advantage weighing in GoPro’s favor is the company’s adaptability. Though 2016 saw many stumbles, the launching of its new $4.99 monthly cloud subscription service, GoPro Plus, is not one of them. The service was a smart move on the giant’s part, allowing GoPro users to skip the SD card step while making editing and sharing content that much more organic. Another form of stable monetization while making licensed content easy to tackle will surely benefit shares in the grander context.

Additionally, more and more companies are splashing into the virtual reality scene, and GoPro is ready to be a player with the Omni, the company’s first 360, six-camera camera rig. It is the exact kind of relevant move forward that could help GoPro recover lost share momentum. Though the camera currently has a hefty $5,000 tag attached, CEO Woodman is confident in its performance so far among professionals, noting one aimed at consumers is next in the works.

For a company who has built its fame and fortune on the popularity of its cameras, consider its latest, masterful serve to the market: the internationally available, waterproof Hero5 Black, priced at $349.99. The action camera has received rave views on back of a slimmer touchscreen display, one-touch recording, 4K video capabilities, and even the ability to take a photo with a simple voice command. Finessed products like the Hero 5 Black are exactly what has led GoPro to outclass the competition.

Right now, especially after the tough year it encountered, GoPro could be a viable M&A target with compelling prospects like these on the table; especially as it dabbles into the field of virtual reality. There is nothing quite like a flourishing rally after a year of misses- and 2017 is the time to get bullish on this stock.

Disclaimer: The author has no positions in the stock mentioned. This article is intended for informational and entertainment use only, and should not be construed as professional investment advice.

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