Is GoPro Inc (GPRO) A Broken Company?

goproJay Taylor: It was just last week that GoPro Inc (NASDAQ:GPRO) put in its all-time high. Now it’s pretty clear that the GoPro stock bubble has popped.

gopro-stock-bubble

The stock touched $98.47 per share midday last Tuesday, a gain of more than 300% since its IPO in June at $24 per share.

The stock has perplexed traders for a while now. While the company has solid fundamentals and a 31% annual growth forecast from analysts for the next few years, its valuation completely surpassed any logic or reason.

I wondered in a late-September article how much higher it could go and wrote this:

As much as I believe GoPro is here to stay, I simply can’t justify recommending this stock as anything other than a speculative play.

Even at what seemed like ridiculous levels then, the stock rose an additional 25% between when I wrote that article and its all-time high less than two weeks later.

But alas, the bubble has burst.

The stock is trading down Wednesday by more than 8%, a decline of over 30% from the all-time high of $98.47 per share.

Below is a chart of GoPro stock with several key events labeled.

gopro-stock-bubble

  • A – June 24: GoPro’s initial public offering (IPO). The stock opened at $24 per share and closed up 30%.
  • B – October 2: GoPro announced that its CEO and his wife will donate $5.8 million shares to their charitable foundation, using a loophole to end the post-IPO share lockup early. Shares fall almost 7%.
  • C – October 7: GoPro stock touches its all-time high of $98.47 per share and ends the day with its all-time closing high, $93.85 per share.
  • D – October 8-10: GoPro stock falls nearly 10% Wednesday through Friday after reaching all-time highs on Tuesday.
  • E – October 13: A rumor started by a journalist said to have been in touch with the family of Forumla 1 driver Michael Schumacher sends GoPro stock lower by almost 10%. In a coma since a major ski accident in late 2013, the reporter blamed Schumacher’s injuries on the GoPro camera mounted to his helmet at the time of the crash.
  • F – October 14-15: GoPro’s fall continues, down an additional 10% since the Schumacher rumor.

Is GoPro a broken company?

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *