GoPro, Inc. (GPRO – Free Report) stock has tumbled 65% in the past year against the S&P 500 composite and the sub-industry’s growth of 24.4% and 12.9%, respectively. The decline can be attributed to sluggish sales in both its retail stores and GoPro.com online channel. Loss estimates for 2024 have widened to $2.44 per share from a loss of $1.05 over the past 60 days.
One-Year Stock Performance
Image Source: Zacks Investment Research
Cut-Throat Competition, Macro Woes Hurt GPRO’s Prospects
San Mateo, CA-based GoPro manufactures mountable and wearable capture devices, such as action cameras and related accessories. Its core product is the HERO line of capture devices, which was initially launched in 2004. The company’s latest innovations include cloud-connected HERO13 Black and the HERO, and MAX, a 360-degree waterproof camera.
GPRO has been dealing with multiple challenges over the past year. Global macroeconomic uncertainty and lack of promotional efforts have led to subdued consumer spending behavior. These factors have adversely impacted discretionary spending on non-essential items like action cameras, further reducing GoPro’s sales. Fierce competition in the camera and camcorder market and the delayed launch of its new 360-degree camera are added management concerns. All these have led to lower expectations of units and revenue growth in 2025 than in 2024. Revenues for 2024 are now estimated to be $800 million (+/- $10 million), down from the previous forecast of $850-$870 million. Unit sales are projected to reach 2.45 million, lower than the earlier estimate of 2.6-2.7 million.
Furthermore, to maintain its market share, the company invests heavily in research and development (R&D), which puts pressure on its profit margins. While this has improved the efficiency of its R&D efforts, rising competition has led to pricing challenges, reflected in its recent price adjustments. Operating in the consumer goods sector, GoPro must also make significant investments in advertising and marketing, as inadequate spending in these areas negatively affects consumer demand.
Expansion of Retail Footprint & Subscribers Aid GPRO
In May 2023, the company unveiled its global retail expansion plan. Since then, it has added more than 6,300 new retail doors, bringing the total doors count to 25,000 till now. GoPro added 1,200 new retail doors across all regions in the last reported quarter, including roughly 500 Sam’s Club stores in the United States. It earlier stated that it targeted adding another 3,000-6,000 new doors by the end of 2025 to boost its go-to-market capabilities for its product roadmap.
GoPro has been focusing on building its subscription business, which includes unlimited cloud storage, live streaming, no-questions-asked camera replacement, discounts on cameras and a unique line of accessories. In the third quarter, subscription and service revenue grew 11% year over year to $27.5 million, driven by better retention and growth in Premium+ subscribers, leading to a 9% rise in ARPU. GoPro had 2.56 million subscribers (54,000 Premium+) at quarter-end, a 2% increase from last year. By the end of 2024, management expects subscriber numbers to remain steady at 2.55 million. To grow its base, GoPro enhanced its subscription benefits and partnered more closely with retailers in North America and globally.
To drive profitability and growth, GPRO is targeting an operating cost of $250 million (+/- $5 million) for 2025, a reduction of nearly $110 million from the prior year, driven by a 26% reduction in headcount and other expenses undertaken in 2024.
End Note
With a Zacks Rank #3 (Hold), GPRO appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. The stock has been trading below both the 50-day and 100-day moving averages, indicating that investors are bearish on the stock.
50 &100-Day Moving Average
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Stocks to Consider
Some better-ranked stocks from the broader technology space are InterDigital, Inc. (IDCC – Free Report) , Ubiquiti Inc. (UI – Free Report) and Qualcomm Incorporated (QCOM – Free Report) . IDCC & UI presently sport a Zacks Rank #1 (Strong Buy), while QCOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks. It has a long-term growth expectation of 17.44%.
Ubiquiti’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.
Qualcomm is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. It is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.
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