GoPro’s Difficult Future

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GoPro (NASDAQ: GRPO) shares have rallied recently, until, that is, the recent launch of its newest products, the HERO6 Black and a 360 degree video camera called Fusion. Wall St. did not think much of the new flagships and the stock sold off.

GoPro shares had risen 30% in a month to just shy of $12. The increase could be considered a modest and perhaps unjustified bounce off a bottom. GoPro shares have a 52-week low of $7.14 and 52-week high of $17.68.  As the new product was announced, they slipped below $11 at the end of last week.

Among the most prevalent criticisms of the product is that they are overbuilt and too expensive. That would mean the market for them would be very small.  The HERO6 Black captures 60 frame per second and high resolution 1080p240 video. But its price is $499.99

The Fusion’s 360 degree capture is an advanced, and rare feature, but the product is priced at $699.99. A huge number of consumers who are not professionals will have trouble justifying the price.

As the holidays approach, GoPro has to hope consumers will think its two new models are more than very expensive toys with features almost no one needs. Several video camera makers offer much less expensive products. These include HTC, Garmin, and Sony (NYSE: SNE). GoPro can claim they are “under featured”. Most potential customers will have trouble being convinced, if their goals are just to capture high quality video

GoPro’s primary competition is actually the smartphone. The Apple iPhone 8 and iPhone X will put even more pressure on its new products. Released at about the same time as the GoPro products, the iPhones have already receive unprecedented promotion.  While their capacity is not at the level of the new GoPro products, for millions of consumers, the iPhone video capabilities will be more than good enough

It has been often mentioned that the GoPro products are great for professionals, but well beyond the needs of almost everyone else, particularly at their price points. With the introduction of new GoPro products, it is worth reflecting on again