GoPro (GPRO) Stock: Don’t Get Caught In The Hype

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GoPro Inc (NASDAQ: GPRO)

GoPro is having an incredible day in the market, and for good reason. In just 4 days, the company will release the GoPro Karma, the first drone in the company’s history. At the same time, the company will be unveiling the new Hero 5. As a result, investors are excited, and everyone seems to be joining the frenzy to get in before the release. Personally, I’m not playing into the hype surrounding GPRO. Today, we’ll talk about why.

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Karma Isn’t Going To Be So Big For GPRO

I am a drone enthusiast. Am I going to buy a Karma? Well, probably not! The truth is that I am a DJI fan. If I’m going to go for professional quality aerial video, I’m going to go for the company that revolutionized the industry, the company with the experience, and the company I can trust. For me, that’s DJI. At the end of the day, the company has created the Phantom series, one of the most trusted in the aerial videography arena. GoPro is coming in years late with a product that offers what is already out there. They have a tough, uphill battle if they plan on gaining traction in drones. This is not going to be the overnight success that many seem to think it will be.

Is The Hero 5 Going To Save The Company?

As mentioned above, GPRO is likely to have a rough time in the drone industry. However, what about the industry that it knows best? What about action cameras? Another big thing that’s happening on the 19th is the company’s unveiling of their action camera, the Hero 5. Unfortunately, there are some concerns here as well.

The truth is that when it comes to action cameras, GPRO offers one of the most expensive in the industry, and the industry is growing in competition. With Apple improving the iPhone camera and action camera competition providing lower-priced options that seem to offer everything that GoPro can offer, the company is likely to see more of the same with regard to sales. Unfortunately, this will likely lead to declines in the long run.

What We’re Seeing From The Stock Today

Today, investors are excited. They’re expecting to see something great with regard to the Karma and the Hero 5. As a result, we’re seeing gains in the value of the stock. Currently (1:14), GoPro shares are trading at $13.48 per share after a gain of $0.41 per share (3.14%) thus far today.

What We Can Expect To See Moving Forward

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Leading up to the release of the Karma and the Hero 5, I’m expecting to see a continuation of gains as investor excitement builds. These gains could continue following the presentation if everything goes well. So, in the short run, this is likely to be a very strong play. However, in the long run, there’s a lot to be concerned about here, and I’m not sure that GPRO has come up with a cure for their ailment.

At the end of the day, GoPro’s flagship product is one that has a very small audience, limiting the company’s ability to drive sales. So, the company is venturing into a new industry with drones. Unfortunately, that industry is already competitive, already defined, and growing in competition. At the end of the day, I’m not sure that GPRO can compete. All in all, there are too many long-term risks on this one for my taste.

[Image Courtesy of Wikipedia]

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