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Buy Shares Of GoPro Before Earnings Next Week

Summary

Shares of GoPro Inc. are down 55% from their August highs as investors worry about slowing revenue growth and more risk for growth stocks in general.

GoPro is still a premium company with strong leadership in the mini-camera market and exciting new products and services being launched.

The company reports earnings next week. We believe GPRO will beat analyst estimates and that strong guidance will give investors confidence and drive the share price higher.

GoPro Inc. (NASDAQ:GPRO) has led investors on a wild ride over the last quarter. A chart of the stock's recent price action resembles a daring ski slope or the trajectory of a wing suit base jump that many GoPro users have recorded.

(Source: TradeStation)

Over the past three months, shares of GPRO have lost more than 55% of their value, falling from an August high of $65.49 to a current price near $29. Three primary challenges were responsible for the stock's dramatic drop:

First, the market's decline in August - set off by slowing economic growth in China - caused investors to shy away from growth stocks. With risk of a broad market selloff, investors chose to lighten their exposure to more volatile growth stocks and allocate more capital to mature, stable companies.

Second, GoPro supplier Ambrella Inc. (NASDAQ:AMBA) adjusted its third quarter revenue guidance range, projecting a midpoint of $91.5 million which was below analyst expectations for revenue of $92.3 million. Investors worried that the lower projections from Ambrella indicated low demand from GoPro.

Finally, Piper Jaffray analyst Erinn Murphy downgraded shares of GoPro last week, placing a $25 target price on the stock, citing pricing pressure...


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