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What Longbow Research Thinks of GoPro’s Recent Launch of Hero5

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Price movement

GoPro (GPRO) has a market cap of $1.9 billion. It fell 7.0% to close at $13.88 per share on October 24, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.4%, -19.1%, and -22.9%, respectively, on the same day. GPRO is trading 11.4% below its 20-day moving average, 7.9% below its 50-day moving average, and 11.0% 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 YTD price movement of JKL was 13.9% on October 24.

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

  • Sony-ADR (SNE): $41.6 billion
  • Canon-ADR (CAJ): $39.1 billion
  • Best Buy (BBY): $12.5 billion

Latest news on GoPro

TheStreet reported, “Longbow Research said that availability checks for GoPro’s Hero 5 products show that supply is low, the Fly reports.” It also added, “The ‘rushed’ product launch resulted in some manufacturing issues.” TheStreet observed, “This could indicate that fourth quarter guidance is too high, the firm said, adding that GoPro could face execution challenges.”

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GoPro’s performance in 2Q16

GoPro reported 2Q16 revenues of $220.8 million, a YoY (year-over-year) fall of 47.4% from the $419.9 million reported in 2Q15. Its net income and EPS (earnings per share) fell to -$91.8 million and -$0.66, respectively, in 2Q16, compared with $35.0 million and $0.24, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of -$76.8 million and -$0.52, respectively, in 2Q16, compared with $75.3 million and $0.35 in 2Q15.

GoPro’s cash and cash equivalents and inventory fell 41.5% and 52.2%, respectively, between 4Q15 and 2Q16. Its current ratio fell to 2.1x, and its debt-to-equity ratio rose to 0.45x in 2Q16 compared with 2.8x and 0.43x, respectively, in 4Q15. The company expects revenue of $1.4 billion–$1.5 billion in 2016.

Now we’ll take a look at VF Corporation (VFC).

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