UPDATE: This is an old article from Oct 2014. You might want to read my June 2015 article… 10 Reasons I am Long GoPro (and wasn’t before).
I’ve been an enthusiastic fan of GoPro’s for some time. My first was the GoPro 2 and I flew it in drones, took it scuba diving off Hawaii, and captured umpteen amazing family moments. I bought two of the new GoPro 3’s when they came out, ostensibly to capture a cross-country driving journey in 3K/3D, a journey which I loved… but no thanks to the GoPro 3’s which wreaked havoc with their unreliability. But that’s another story….
Here are the 10 reasons why I’m short this stock
- It’s massively overvalued (who can argue?)
- Upcoming share lockup expiry in December (a lot of insider shares are likely to be sold)
- Everyone I know who might want a GoPro already has one, and sees no compelling reason to upgrade. This is not an iPhone… and the product is already ‘good enough’.
- The botched charity shares donation and its somewhat questionable timing around the launch of Hero 4
- No evidence to suggest the company or its founders recognise the mainstream ‘family’ market as being clearly the most compelling to go after, or if they do, where is the proof of addressing it. Viral marketing and a few more Best Buy displays won’t cut it.
- It’s a single product camera company – and it operates (currently) in a niche market
- Risk of loss of interest by founders now that it’s gone public – feels too much like a family business
- Risk of it simply becoming a lifestyle business for its founders – and trading at a low multiple
- Where are the new innovative products? The 360 degree camera? The tossable GoPro? The flying drone GoPro? The GoPro Powered™ radio-controlled cars, boats… security cameras?
- Did I mention it’s hugely and massively overvalued, by any reasonable measure? A price to earnings ratio of 277x is clearly insane.
This stock is like Felix Baumgartner now… it needs to come back down to earth.