GoPro stock jumped 19% today after the company secured Danny Coster's services, one of Apple's top product designers. On a publicity front, that's great news and I'm sure investors traded it. However, the steal may really be only in Coster's favor. Product design hasn't been the biggest problem for GPRO (arguably, it's their strength). Rather, it's the extremely saturated market, and the hardware focus that prevents much differentiation from the litany of competitors. Plus, their valuation is still at crazy levels thanks to GPRO ballooning their overhead costs.
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GoPro Inc.
It's confession time: GoPro Inc. (GPRO) not only popularized the action camera craze, it is the action camera craze. Led by the charming and relentlessly energetic chief executive officer, Nick Woodman, the former U.C. San Diego graduate took a singular idea -- allow sporting enthusiasts to effortlessly capture their bravado -- and turned it into a worldwide phenomenon.
Incidentally, this is both the good and the bad for GPRO stock. Investors certainly were enthused about the action camera's potential, at one point driving up the GPRO stock price to nearly triple digits, providing 290% returns for those that got in on the company's initial public offering.
But since October of 2014, it's been a stomach-churning ride for GPRO stock investors, with the company losing roughly 60% of market capitalization over a five-month period. A recent article from Barron's added more doubt, with a headliner that bluntly forecasted a $25 price target for GPRO stock, or a 25% discount from an already embattled valuation.
Mr. Woodman countered, noting that the criticism of GoPro being a "one trick pony" is a myopic one. Nevertheless, aside from technological diversity and the marketing of accessory devices, GoPro's sole product lineup is action cameras. This makes the company highly susceptible to fierce price-cutting competition, where a premium GoPro action camera can cost upwards of $500.
That is likely the reason why many investors find GPRO stock to be off-putting, especially given the atmosphere of uncertainty lingering in global markets.
