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Why Did GoPro Stock Fall on September 26?

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Price movement

GoPro (GPRO) has a market cap of $2.4 billion. It fell 1.3% to close at $16.92 per share on September 26. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 10.5%, 13.6%, and -6.1%, respectively, on the same day. GPRO is trading 17.3% above its 20-day moving average, 22.4% above its 50-day moving average, and 32.6% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Small Value ETF (JKL) invests 0.20% of its holdings in GoPro. The ETF tracks a market-cap-weighted index of US small-cap value stocks. The index stocks from the 90th to the 97th percentiles of the market cap spectrum using fundamental factors. The YTD price movement of JKL was 13.3% on September 26.

The market caps of GoPro’s competitors are as follows.

  • Canon-ADR (CAJ) — $38.8 billion
  • Sony Corp.-ADR (SNE) — $42.3 billion
  • Best Buy Co. (BBY) — $11.9 billion

Latest news on GoPro

GoPro fell 1.3% on September 26 after Snap introduced Spectacles. The introduction of Spectacles should increase competition in the camera market.

In a press release on September 24, Snap reported, “Spectacles are sunglasses with an integrated video camera that makes it easy to create Memories.” It added, “We’ve created one of the smallest wireless video cameras in the world, capable of taking a day’s worth of Snaps on a single charge and we integrated it seamlessly into a fun pair of sunglasses-available in 3 different colors!”

It further noted, “Spectacles connect directly to Snapchat via Bluetooth or Wi-Fi and transfer your Memories directly into the app in our brand new circular video format.”

On September 19, GoPro also introduced the KARMA drone and a new HERO5 camera.

GoPro’s performance in 2Q16

GoPro reported 2Q16 revenues of $220.8 million, a fall of 47.4% compared to $419.9 million in 2Q15. The company’s gross profit margin fell 9.0% in 2Q16 compared to the same period last year.

Its net income and EPS (earnings per share) fell to -$91.8 million and -$0.66, respectively, in 2Q16, compared to $35.0 million and $0.24, respectively, in 2Q15. It reported adjusted earnings before interest, tax, depreciation, and amortization and adjusted EPS of -$76.8 million and -$0.52, respectively, in 2Q16 compared to $75.3 million and $0.35 in 2Q15.

GoPro’s cash and cash equivalents and inventory fell 41.5% and 52.2%, respectively, in 2Q16 compared to 4Q15. Its current ratio fell to 2.1x, and its debt-to-equity ratio rose to 0.45x in 2Q16 compared to its current and debt-to-equity ratios of 2.8x and 0.43x, respectively, in 4Q15.

The company expects revenues of $1.4 billion–$1.5 billion in 2016.

Next, we’ll look at Ball Corporation (BLL).

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