Why You Should Have Bought GoPro Stock Yesterday


Photography buffs have enjoyed a revolution in only the past year as the development of GoPro cameras have allowed the easy capture and recording of photos in nearly any environment.  If you've launched up Facebook and seen pictures taken on underwater scuba trips or in the ruins of Rome or on deep underground spelunking trips, odds are good that the durable GoPro camera provided the means for the latest snapshot.  These cameras pop up on Christmas wish lists and Amazon's best-selling lists frequently, yet the stock has tumbled since peaking in October of 2014, including a particularly poor month of June where GoPro lost over 10% of its value.  A recent run of poor fortune doesn't mean GoPro should be avoided -- quite the opposite, in fact, as the low offering price today gives ample opportunity for good growth tomorrow.

Competing In A Rough Industry

Photography companies suffer from very large swings of volatility.  Take a gander at Canon stock (CAJ on the NYSE, trading for $32.49 a share), for instance, to see the past ten years without net growth despite wild swings up and down.  You'd think GoPro (GPRO on the NASDAQ, trading for $50.40) hasn't had as much time to experience the rapid rate of growth and decay, since their IPO launched in February of 2014.  Yet volatility has come in spades to this fresh-faced company, with their stock price doubling in just six months and then losing almost all the value in the time since.  GoPro has far less of a diversified product line, furthermore, in comparison to some of its larger photography competitors.  This makes it far more vulnerable to swings of customer preference and buying patterns, while companies like Kodak (KODK on the NYSE, trading for $15.65 a share) have branched out into computer chips, imaging, and even medical tech.  Even so, GoPro has upped the ante by releasing new camera tech that will end up on every photo buff's wish list, likely to keep them front and center in their field.

Water, Water Everywhere

The big news out of GoPro to start the third quarter involved their final development of a fully waterproof camera.  While that's not exactly new technology, having been invented nearly three decades ago, they're the first cameras offering professional quality shots with the capability of underwater exposure for a price tag that's considerably smaller than the five-digit models sold to pro photographers.  The HERO4 Session model, resembling a compact rectangular cube, will hit the stores come the end of July.  In addition to offering waterproof exposure, the new HERO4 Session upgrades on the previous HERO model by decreasing the size and weight of the camera by fifty percent, making it an excellent companion for traveling about on land and sea.  Previous GoPro models had some waterproof case accessories that allowed the camera to be taken underwater, but the new Session improves by allowing for complete immersion with the need for a case, offering shots as deep as 40 feet underwater.  With a single-button camera capture, the Session can begin to take stills or video footage at just a single touch, which the company promises will improve speed capture capability.  With 1080p video recording that can capture 60 frames per second, Session users can take video shots resembling high-quality television or films even if they do not have the technical skills of pro photographers.  The appeal of just one button to control a camera should not be overlooked: the GoPro design team wanted to emphasize simplicity of their products in order to appeal to entry-level photographers who haven't quite mastered concepts like frame, lenses, and exposure.

Buying Low

The GoPro announcement comes at a key time for the company's stock value.  GoPro is down by nearly 20% in 2015, compared with 1% growth of the broader market as reflected in the S+P 500.  Their stock will rise further towards the back end of the year as consumer spending grows coming out of the summer session and towards the holidays.  The company's health appears strong even if their stock hasn't performed well since 2014: the company's profits doubled last year, one of only a few camera companies to enjoy profits in the age of smartphone cameras.  GoPro CEO Nick Woodman, who famously designed the camera after being frustrated that handheld models couldn't compete with professional-quality shots, believes his company is on the cusp of immense success.  They'll launch a 360-degree camera by the end of the year, similar to the models used for Google Street Maps image capture, for the price tag of just $400.  GoPro has also partnered with Ascentia, a drone manufacturing firm, with the hopes of designing and marketing a quadricopter drone capable of flying and taking overhead snapshots for photo buffs who want to try their hands at aerial shots.  While most of these plans remain at the drawing board phase, it's clear that GoPro wants to improve upon its status quo rather than sell customers just one single product with the occasional update.  With their stock trading at well below the 52-week high, there's no doubt that this camera company represents a smart buy at a time when it's possible to get in at bottom-barrel prices.  GoPro stock will climb as their products continue to generate hype, able to generate the critically valuable word-of-mouth marketing rather than relying on traditional ads.  Impatient investors should see immediate returns as their new waterproof camera comes onto the market, then ride out a steady growth rate as consumer spending accelerates towards the end of 2015.

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