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Is Xiaomi Looking to Acquire GoPro?

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Apr. 30 2018, Published 7:31 a.m. ET

GoPro stock rose 8% on April 13

GoPro (GPRO) stock rose 8% on April 13 after a number of websites reported that China’s (FXI) Xiaomi might be interested in acquiring the company. Earlier this year, GoPro CEO Nicholas Woodman said that management was open to an acquisition and hired investment bank JPMorgan Chase (JPM) to look for potential acquirers.

GoPro’s acquisition could be valued at $1 billion, which is significantly lower than its $10 billion valuation when it was trading at $80 per share. GoPro’s market capitalization is currently $691 million.

We’ve seen how GoPro device sales have fallen over the last year. GoPro launched the Karma drone in late October and expected it to be a customer favorite and drive revenue in the future. However, Karma had to be recalled due to battery issues and reports of customers losing control of the device.

GoPro has now exited the drone business and will sell off the remaining Karma inventory by June. GoPro devices are expensive compared to peer products. GoPro has failed to compete with low-cost competitors. Xiaomi has launched a cheaper 4K+ camera.

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Partnership with Jabil

In March, GoPro announced a partnership with Jabil (JBL), which is a multiyear technology and equipment license agreement. According to the agreement, Jabil will leverage GoPro’s IP (intellectual property) and reference design to produce camera lenses and sensor modules for GoPro’s approved third-party products.

GoPro’s CTO (chief technology officer) Sandor Barna stated, “This collaborative approach with Jabil will enable innovative, GoPro enabled products and services from some of the most exciting hardware and software companies out there. Imagine a world where video conferencing, robotics, and even self-driving cars are powered by GoPro’s camera lenses and image sensors. Together, GoPro and Jabil can make this a reality.”

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