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GoPro Inc (NASDAQ:GPRO) Is On A Downward Spiral

Written by on September 2, 2015

The latest bout of bad news for GoPro Inc (NASDAQ:GPRO)‘s share price came from its chip supplier Ambarella Inc., which said it expects weak demand for wearable cameras.

Ambarella expects chip shipments for the wearables market to be down in 3q2015 from 2q2015 as well as 3q2014 because of lack of new products. GoPro has launched Hero+ LCD and Hero4 Session cameras in June and July of this year. With ever improving smartphone cameras, the scope for growth for GoPro action cameras may be limited. Indeed, the market of adventure sports enthusiasts may be limited and a camera is not a piece of hardware that consumers would like to update every year especially when they already have to update their smartphones every year or two.

Finally, GoPro cameras cost $400 for top-end ice-cube-size versions like the Hero4 Session which puts it in Apple Watch (or Moto 360 smartwatch) territory. A camera — even an action camera — is a dedicated product with only one function. The number of people willing to spend hundreds of dollars for a camera may be limited — since their smartphones already most likely have 8 or 13 or 21 megapixel cameras and they may own DSLR cameras from Nikon or Sony for high-end photography hobbies.

GoPro Share Prices

GoPro share prices have been through quite a roller coaster ride since debuting in June of last year. From an IPO price of $24, they rose by more than 400% to reach $98 by October 2014. Since then, it has been a downhill slide accompanied by mini stock sales by the CEO and majority shareholder Nick Goodman which doesn’t inspire confidence among investors. The stock has lost more than one third of its value in the last three months. The 3q2015 results would be keenly watched by analysts and anxiously awaited by investors. The analysts have already issued dire prospects regarding the third quarter results. Investors will be well advised to brace themselves for a hard landing.