GoPro’s Big Test Is Soon to Come

Photo of author

By Jacob Maslow

New action camera from Gopro, Hero 4
New action camera from Gopro, Hero 4

There are many tests that public companies have to face down. The first and most basic test, of course, is to report a healthy profit and revenue growth every single quarter. This is easier said than done. It is not enough for a company to be in the black and produce a profit. They have to also beat market expectations.

This is going to be a problem if there are a lot of analysts following the company and the range of expectations go from realistic all the way to the absurd. The worst part of it all is that, even if you meet market expectations, even a little piece of bad news can drag your stock value down. This is definitely the case with GoPro (NASDAQ:GPRO).

GoPro recently produced solid numbers and experienced a nice spike in its stock prices. However, thanks to Wall Street sensitiviy, the price of this outdoor webcam gear company slipped dramatically. That is how sensitive the market is. You have to present a very very positive picture. That is how demanding Wall Street is.

Well, if that wasn’t scary enough for you, the scariest situation for this company would be when its lockup period expires. A lockup is when big investors and company insiders are prevented by law from unloading their shares. When the lockup expires, the company’s stock faces a lot of downward pressure because when these investors unload their shares, this would depress share prices.

The good news for GoPro is that it has a lot of hype backing it up. It has a lot of favorable media impressions and presence. However, it is anybody’s guess whether or not these are enough to keep the market excited about this company’s stock. Up to 59% of the company’s existing 127.8 million shares outstanding can potentially be put up for sale. This is going to be a major test of the market appeal of this company.

The main thing I like about GoPro is that it has a little bit of Apple’s (NASDAQ:APPL) game play. It is a mix of a hardware, designer, manufacturer, and technology company. Of course, it only has a fraction of Apple’s cult-like appeal. Still, GoPro might be able to survive the lockup expiration, assuming that the broader market doesn’t suffer from turbulence in the period of time the lockup expires.


Images Courtesy of DepositPhotos