Can you picture GoPro (GPRO) shares above $10? I certainly can. If the stock only moves 93 cents higher to $10 per share, it would return 10%. If that’s not a nice snapshot into the future I don’t know what is.
Owing to declining demand for its action-cameras, GoPro had a disastrous 2016, losing some some 50% of its value. The stock has been under heavy selling pressure over the last three months, with shares falling sharply by 44%. While I’m not willing to call the bottom here yet, it’s tough to ignore how attractively priced GoPro has become.
GoPro is expected to lose $1.49 per share for the fiscal 2016 year that ends December. This projected loss — which would reverse the 79-cent per share profit from a year ago — is the main reason the stock has gotten crushed. However, based in fiscal 2017 estimates of 27-cent loss, that would be a drastic improvement in only one year. How does it get there? The consumer goods player last week said it will resume sales of its Karma drone.
GoPro launched Karma last year to help the company better diversify its revenues beyond mountable/wearable cameras and accessories. However, a mechanical issue with the battery forced the company to can cancel further Karma production and issue refunds to customers. GoPro is now confident it has resolve the issues and will re-launch the product in February.
What’s more, along with the launch of its HERO 5 Black and HERO 5 Session cameras in September, the company in also launched a cloud subscription service, called GoPro Plus. The service provides users an easy ways to upload footage from their camera to the cloud. This then allows users to access, share and edit their footage using GoPro’s suite of mobile and desktop editing applications.
All told, the risk-versus-reward in GoPro shares have now turned positive. With $225 million in cash on the balance sheet and zero debt, GoPro doesn’t have too go far deliver value.