GoPro Inc (NASDAQ: GPRO)
GoPro has been having an incredibly rough time in the market as of late and it seems as though the declines will continue. In fact, Piper Jaffray recently weighed in on the stock, lowering its price target further. Now, many investors are asking, “Why is it that GPRO is falling?” Today, we’ll talk about why the stock has seen such a hard time, take a look at the Piper Jaffray downgrade, and discuss what we can expect to see from GPRO moving forward.
Why GPRO Is Having Such A Hard Time In The Market
In the beginning, when GoPro launched its IPO, it was expected that the market for a video camera that could be mounted on helmets – or just about anywhere else – would be huge. However, it seems as though that’s not the case. In fact, the market for the camera is quite small. Here are some problems that are shrinking the market for GPRO cameras:
- Competition – GoPro’s claim to fame was the idea that the camera had the capability of shooting high quality video when in motion along with the ability to attach the camera to your person. As time passes, more and more companies are making cameras that are capable of doing this. In fact, many of the new smartphones are capable of these actions. Take a look at the iPhone 6s. Not only can it take video in motion, the quality of the video is better than that of the GoPro camera. Not to mention, techies have come up with several ways to attach the iPhone 6s to a helmet, T-shirt and more!
- The Target Audience Isn’t Interested – When it comes to the target audience for GPRO brand cameras, we’re looking at extreme athletes. This creates a bit of a problem. First and foremost, this market isn’t very big. However, the problem goes beyond the fact that the target market isn’t big. The sales we’re seeing for the GoPro cameras suggest that athletes aren’t necessarily the consumers that are actually buying the cameras. So, what we’re seeing here is a target audience that’s not very interested in a product and sales happening through an audience that is under-vetted. Ultimately, GPRO doesn’t know exactly who their target audience should be. Without knowing this, the company can’t create cameras that are designed for the people that are actually buying them.
Between the two issues above, GPRO can’t seem to make the sales that investors want to see. As a result, we’ve seen declines in the value of the stock.
Piper Jaffray Weighs In On GPRO
As we continue to see declines on GPRO, analysts are starting to weigh in with overwhelmingly negative opinions. In fact, recently Piper Jaffray weighed in. In their report, Piper Jaffray maintained an “Underweight” rating on the stock and dropped the price target in a big way. The firm brought the price target from GPRO down from $20 per share to just $15.
What We Can Expect To See Moving Forward
Moving forward, I’m not expecting to see much by way of positive movement from GPRO any time soon. Unfortunately, the company’s plan of selling their cameras to athletic consumers isn’t working. In addition, when the quality of a high end video camera can be beat by a cell phone there are some problems. Ultimately, it’s time for GPRO to hit the drawing board and fix two problems. First, they are going to need to define an audience. Doing so will allow them to create products designed for that audience. Also, the company is going to have to take a close look at product quality and figure out what they can do to improve the video their cameras record. All in all, this is going to take quite a bit of time and their stock is likely to continue declining in the process.
What Do You Think?
Where do you think GPRO is headed and why? Let us know your opinion in the comments below!
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