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GoPro (GPRO) Stock Gains 6%, Should You Buy?

Shares of GoPro GPRO have climbed on Monday morning, marking one of the stock’s best days since the company announced in mid-March that it expected to meet the upper end of its previously projected first quarter 2017 outlook. But should you really consider buying the struggling action camera maker’s stock now?

Recent Performance

GoPro was up 6.34% through morning trading on Monday, and the company is currently a Zacks Rank #3 (Hold).

GoPro did indeed go on to beat both Zacks Consensus Estimates for revenue and earnings last quarter. The company posted $219 million in first quarter revenue, and a loss of $0.53 per share was enough to surpass expectations.

Today’s movement comes without much real news surrounding the mounted camera maker, so instead, here is a quick look at what might be going on with GoPro.

Good News

GoPro once dominated the niche action camera market that it helped create, but smartphone camera improvement and more competition has seen its sales fall off. Yet, despite the competition, there is room for growth. Today, GoPro scores a B for Growth in our Style Scores system.">According to the research firm Global Market Insights, the global action camera market could grow at a compound annual growth rate of more than 22% between 2016 and 2023.">Another report from Technavio calls for the action camera market to balloon into a $5.81 billion a year industry by 2021.

The company also has potential to expand its 360-degree video technology and move more heavily into the quickly growing world of virtual reality. GoPro announced its 360-degree, six GoPro cameras fused into one,">Fusion camera last month.

Furthermore, on March 15, GoPro announced its plans to cut 270 jobs to reduce expenses in order to try to become profitable in 2017.

Bad News

GoPro has seen its stock price fall off a cliff from its all-time high of $86.97 in September 2014. For the last year, its shares have shown little sign of life as they have floated around the $8-$10 per share range.

Despite its potential growth markets, GoPro, with a current market cap of $1.31 billion, might lack the resources to fully compete as companies such as Facebook FB and Samsung invest further into VR technology.

What’s more, in the first quarter, GoPro reported that shipments fell to 730,000 units—the expectation was it would only fall to roughly 805,000. Action cameras from Drift, Garmin GRMN, and iON are now all players in the market.

Bottom Line

GoPro’s once meteoric rise seems light-years away at this point. But the company’s small first quarter beats, along with its cost-cutting intiatives, showed GoPro still had a bit of life left. Still, at this point it seems like investors will have to wait and see if 360-degree video and VR can save the struggling action camera giant.

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