Vladislav Shchukin
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GoPro. Looking for Changes.

   10 months ago GoPro Inc. was one of the most successful investments. Fueling interest of market by expansion of business and a large customer base, the company managed to convince investors to take into account in their projections much more than the production of monotype cameras. The first doubts have appeared after the presentation of the new product “Hero 4” without significant innovations. Publication of quarterly reports was also quastionable in July 2015. Then the company did not meet investors' expectations in terms of EPS for the first time.

Release Date   Period End    EPS  /  Forecast    Revenue  /  Forecast
Oct 28, 2015    09/2015    0.25  /  0.41    400.3M  /  435.3M
Jul 21, 2015    06/2015    0.25  /  0.3    419.9M  /  395.2M
Apr 28, 2015    03/2015    0.35  /  0.26    363.1M  /  341.0M
Feb 05, 2015    12/2014    0.24  /  0.17    633.9M  /  580.3M
Oct 30, 2014    09/2014    0.99  /  0.69    280.0M  /  265.6M

   Changed investors' expectations about the future of the company is fully evident in March, when the stock fell to $40. The short rise was driven by rumors of acquisitions by Apple, which was looking for opportunities to upgrade the camera in the new line of gadgets. However, Apple did not become interested in that transaction and prices have found a new bottom at around $ 25.The explosive growth after the IPO in June 2014 and a peak of $90 per share in October is now looking as unattainable summit. Despite high growth in 2015, GoPro is experiencing a strip of strategic failures. Focusing on the issue of drones in 2016, the company is clearly inferior in the resource and technical innovation to leaders such as the Alphabet and Amazon.

   The latest news does not inspire hope for growth. In October quarterly revenue was lower than in the previous period. In addition, Polaroid is preparing a lawsuit for infringement of patent technology. Investors who purchased shares at the peak, lost almost 75% of the investment. And now they are skeptical about the expectations of independent functioning of the company.GoPro situation is almost entirely explained by the analysis of the events. Thereby, significant growth can only be expected when news about acquisition.

   According to our projections, the shares may fall to the level of $20 and lower that is an attractive price to acquire. It makes sense to take a short position and closely follow the news.