Editor’s note: This article was first published in June 2014, on GoPro’s second day of trading; its share price, market capitalisation and 2013 revenue figures are from then. The stock later climbed much higher before falling well below its $24 IPO price.
GoPro (GPRO) made its stock market debut on the Nasdaq yesterday at an initial public offering (IPO) price of $24 per share. It closed up 30%, and today it opened higher again, reaching gains of 30% once more, although right now, after touching $40, the share price is pulling back.
At this price level, the company’s market capitalisation is above 4 billion. To the surprise of many investors, the IPO was oversubscribed despite the many doubts about the company’s business model. GoPro makes high-definition video cameras aimed at people who practise high-risk sports, such as skydivers, cyclists and adventurers in general, since its products let them take photos and record video during the activity.
GoPro also aims to become a social media company by producing original content and collecting videos recorded by its users. It has millions of subscribers across its social platforms, although the revenue from this is practically zero and no further growth is expected there.
The doubts about its core business come from smartphone makers such as Google, Apple and Samsung, among others, which are constantly working on their own smartphones, as well as on countless devices that will probably be able to offer a user experience similar to the products GoPro sells.
Surprisingly, the company had revenue of $986 million in 2013, an 87% increase, and that is probably what investors have been looking at.
Once again we are seeing a heavily overvalued consumer electronics company with growth expectations it will probably not meet in the long run, so we would venture to say that sooner rather than later this company will become a favourite of the bears, if they have not already piled in today.
Featured image: www.Pixel.la Free Stock Photos, CC0 1.0, via Wikimedia Commons.
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