Ilya Silyanov
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GoPro. Still a hero?

Summary:

- The emergence of a misunderstanding with the investors, after the speech CFO

- Announcement of plans to release an unmanned flying object

- Increased competitive pressure

Occupied action-cameras market, known worldwide company GoPro, recently recalled rollercoaster ride. We will understand why it happens and what it can lead.

Let's start with one of the problems, associated with the guidance of company. After the speech on September 9 CFO,it comes more and more misunderstandings between management and investors, there are doubts about the correctness of their actions. The fact that sales GoPro has seasonal nature, the main part of it falls on the 4th quarter. According to Lazar, about 35 - 45% of the total annual income will be earned in the 4th quarter. Then, on October 28, he announced 29% in 4Q. The change in the leadership or changes in profit for 3Q may explain the changes in the expected revenue, but it also still says that the company has no clear plan, and therefore understanding how to build long-term relationships with investors. We also note that GoPro makes no attempt, whether it is a change in the administration of the control structure, change the vector of company policy, explaining its actions to the investment community. So to exit this situation will have to spend a lot of time and effort, which creates another major problem of the company.

Note the fact of declining demand for the company's products. GoPro has guided on its earnings call for Q4 revenue of $ 500M- $ 550M and EPS of $ 0.35- $ 0.45, well below a consensus of $ 690.5M and $ 0.82. For reference, year-ago Q4 sales were $ 633.9M. The Americas were 47.7% of revenue, EMEA 39.1%, and Asia-Pac 13.2%. US revenues were down 9% to $ 169.2 million for the third quarter of 2015, compared with $ 185.6 million the third quarter of 2014. And this is after the release of new products in the 3Q 2015, which is not good. Look at the graph of searches Google, which show that for the year the number of requests has decreased by approximately 20% compared to 2014 year.

In May 2015, GoPro announced the release of an unmanned drone aircraft. This means the company's entry into the market of drones, which is also full of competitors. Despite the fact that the number of sales in the US drone increases, and the market is flourishing, it looks not so rosy after the introduction of the transport department of restrictions on their use, according to which all operators must register their unmanned drone (CNN).

We believe that the company is making a big mistake by not upgrading their high-quality products, for example HERO 4, for holiday sales. GoPro said they would be releasing their new products when they will ready. Given the seasonal nature of sales, we believe this is not entirely correct policy.

Another reason is the emergence of serious competitors in the market. There are such companies like Nikon and Olympus currently occupy the market and secure waterproof camera with Wi-Fi connection and the ability to shoot HD video. It should be noted smaller companies Contour and Ion Camera are also positioning themselves as producers Action cameras, announced their merger. Well, the most important competitor, but our view is Sony. Just a lot of cheap cameras appearing on the Amazon, which in the future will likely be considerable competition.

In conclusion, we say that in spite of the not quite clear the actions of the company, reduced demand in some regions, the final decision on investment in GoPro, can be done in the next few months after the release of a new thriving market drones. This time will be revealing for the future.