GoPro Inc (NASDAQ: GPRO) is having a bit of a rough start to the trading session this morning, and for good reason. The company was halted in the premarket, trading on declines after released its earnings, announcing that it is expecting to see declines in revenue and is slashing more than 250 jobs. Today, we’ll talk about the news, what we’re seeing from the stock, and what we’ll be watching for ahead.
GPRO Lays Off Workers And Lowers Guidance
As mentioned above, GoPro is having a bit of a rough start to the trading session this morning. At the moment, the stock is halted after steep declines as the result of a press release issued early on. In the press release, the company announced that fourth quarter revenue is expected to fall below earlier forecasts, it is slashing the price of the Hero6 camera due to weak demand, and it will cut more than 250 jobs.
In the press release, GPRO said that it would be cutting the price of the Hero6 camera from $499 to $399 per unit. As a result, it is expecting revenue to feel pain by around $80 million in the current quarter. Ultimately, the price cut is the result of lackluster demand for the extreme-action camera.
For the fourth quarter, the company is now expecting that revenue will come in at $340 million. Previously, the company projected revenue to come in around $470 million, plus or minus $10 million. In a statement, Nicholas Woodman, CEO at GPRO, had the following to offer:
“Dispite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier…”
As far as the job cuts go, GPRO is going to be cutting more than 250 jobs. The company said that the job cuts are the result of the company’s plans to exit the drone business. Unfortunately, the company sees the regulatory environment surrounding the drone business to be a harsh one, and due to the regulatory issues, will be exiting the business entirely.
What We’re Seeing From The Stock
As investors, one of the first things that we learn is that the news moves the market. Unfortunately, the news released by GoPro was overwhelmingly negative. As a result, we’re seeing a negative reaction in the market that seems to be just the beginning. At 8:55, GPRO was halted at $7.20 per share after a decline of $0.32 per share (4.26%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on GPRO. In particular, we’re interested in seeing if the lower price of the Hero6 will lead to strong sales. We’re also watching to see what the company will do following its exit from the drone business. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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