GoPro Continues to Struggle, Misses Earnings in Q4
Barely two months ago, I threw the idea out there that action cam maker GoPro has possibly peaked as a company. That notion was based on the fact that the company has seen its stock price nosedive in the last year and a half. Since reaching nearly $87 per share in July 2015, GoPro rested at around $9.75 at the time of that report in early December.
The struggles were the result of a few things: the total failure of the Hero4 camera, a reduction in staff size, the recall of the Karma drone, and the firing of 200 employees from the drone division. GoPro then had another round of layoffs as well as a company restructuring.
All of that leaning out certainly should have helped the company get back to a state of profitability. Instead, though, GoPro reported in its Q4 earnings release that they lost $115.7 million during the quarter, a 70 percent increase over the $35.5 million they lost during Q4 2015. In its press release announcing its fiscal results, GoPro placed the blame on a $102 million tax charge and the $37 million restructuring fee. Further, GoPro said that production problems with the Hero5 camera during the final quarter resulted in fewer shipments to retailers and distributors.
That, of course, had a “serious” impact on sales. GoPro failed to hit their revenue projections during the ever-important holiday quarter, and not by any small amount. Against analysts’ projection of $574.5 million, the company pulled in only $540.6 million, a 5.7 percent decline over the same quarter a year ago.
As a result of the bad financial news, the company’s stock fell almost 13 percent to $9.55 a share as of Friday morning.
GoPro Founder and CEO Nick Woodman preached his excitement about the year ahead, though, in the earnings release. "In 2016, big investments in hardware, cloud, and mobile yielded a solid foundational experience for our customers," he said. "In 2017, we will build on this foundation for our customers while improving efficiency and managing cost to achieve profitability."
There is Hope
It’s not all doom and gloom—yet—for GoPro.
The company announced earlier this week that its Karma drone was ready to return to the market just three months after the recall. The battery issues that resulted in some drones malfunctioning mid-flight and crashing has reportedly been fixed. In his call with analysts, Woodman wouldn’t commit to saying that the drone’s re-release is a game-changer for GoPro, but it does lay the groundwork for the drone to pump some excitement back into the company’s consumer base.
Additionally, during the call Woodman confirmed that they would release a number of new products and accessories in the coming months—namely, the Hero6. He wouldn’t share any information as to timing of the release or other details.
Though it seems GoPro launches these refreshed cameras only after problems arise with the previous model (see: Hero3’s freeze up issues, Hero4’s overall terribleness, and Hero5’s production issues) there’s always some excitement about new product launches. If everything goes smoothly from here for GoPro, it is possible that Woodman’s prediction of profitability this year does come true. But they still have to contend with a market that has become super saturated in the last few years. That product might not always be up to par with what GoPro offers, but at the end of the day, when the consumer sees the price tag, they may be willing to sacrifice a little quality to save a few bucks. So the big question for GoPro has to be, how can they justify their product to the consumer?