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GoPro Inc. Faces An Uphilll Climb After Q1 Earnings Wipeout

  • GoPro stock has been badly hammered after the company posted lackluster Q1 2016 results.
  • GoPro Inc.'s top line has been cut in half while the company's ballooning costs continue pressuring the bottom line.
  • Is GoPro stock now a good value play or a value trap?.

Expectations for GoPro Inc. (NSDQ:GPRO) were low coming into the company's earnings call, yet the company somehow still managed to disappoint. GoPro reported mixed Q1 2016 results that beat top line expectations but missed on the bottom line. The company reported revenue of $183.54M, a massive 49.5% Y/Y decline while non-GAAP EPS of -$0.63 was $0.03 lower than the consensus on Wall Street and compared poorly with EPS of $0.24 that the company posted a year ago.

Meanwhile, GoPro's gross margin tumbled 1,260 basis points to 32.5% compared to a year ago thanks mainly to deep Hero4 Session price markdowns. The market is currently flooded with cheap cameras from the likes of Xiaomi and Sony which has forced GoPro to cut prices on its Hero product series and consequently taken a big hit on the bottom line. Meanwhile, operating expenses climbed 37% despite continued headcount reductions. GoPro's headcount fell 3.6% Q/Q but climbed 37.8% Y/Y to 1,483.

Camera shipments fell 48% Y/Y to 701k though GoPro said that consumer sell-through was close to year-ago levels and 50% above sell-in as retailers continued to work through older inventory.

GoPro Inc. no longer provides quarterly revenue guidance. The company's management, however, reiterated its earlier guidance for full-year 2016 revenue to clock in the range of $1.35B-$1.5B (7%-17% Y/Y decline).

GoPro shares have been hammered after the earnings call, tanking 20% in what is again shaping up to be another...