GoPro Plunges: What Wall Street's Saying
NEW YORK ( TheStreet) –– GoPro
Shares were down 11.8% to $42.31 despite the wearable camera company reporting adjusted earnings of $11.8 million, or 8 cents per share on $244.8 million in revenue. That was up from a loss of $3.2 million, or 3 cents per share, a year earlier.
Analysts polled by Thomson Reuters expected GoPro would earn 6 cents per share on a non-GAAP basis, on revenues of $238 million.
However, the results failed to allay investors’ fears. For example, the company reported a net loss this quarter of $19.8 million, or 24 cents per share, well above the loss of $5.1 million, or 6 cents per share, a year ago. Some investors have commented that with smartphone cameras getting better and better, GoPro’s ability to sell cameras costing hundreds of dollars may decline.
The company tried to address these concerns, noting that its popular YouTube videos are "fueling our virtuous cycle whereby viewership of GoPro content drives sales."
CEO Nicholas Woodburn also tried to demonstrate the company's international reach. "We are a global brand with room for expansion opportunities," he said on the earnings call. "38% of revenue came outside of America and there are growth opportunities in Europe, Japan, China and Korea."
Nonetheless, since its blockbuster IPO, in which shares rose 31% in the first day of trading, GoPro shares have run out of steam for now.
Here’s what a few analysts on Wall Street had to say:
Raymond James analyst Tavis McCourt (Market Perform)
“GoPro reported revenues and EPS above our expectations in its first quarter reported since its IPO. Earnings quality was exceptionally high with DSOs near historical lows and inventory levels dropping sequentially. Gross margins continued to trend up sequentially and y/y, and guidance for 35% revenue growth at the mid-point for 3Q14 was slightly ahead of our previous expectations. Despite the strong quarter and outlook, we believe our Market Perform rating is appropriate as GPRO shares are trading at ~49x our 2015E non-GAAP EPS estimate compared to high-growth consumer names closer to 30x.”
Citi analyst Jeremy David (Neutral, $42 PT)
“We believe in the powerful GoPro positive feedback loop: HERO action cam sales lead to great content which leads to more HERO action cam sales. In our survey, we found that the action cam purchase intention rate of respondents who had seen GoPro videos is 14%, almost 3x the purchase intention rate of respondents who had not seen GoPro videos. In addition, we found that nearly two thirds of U.S. consumers have never seen GoPro content, leaving room for growth. However, we ultimately expect limited adoption of action cameras by mainstream consumers and we forecast the growth rate of GoPro shipments and revenue to continue to decelerate.”