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Buy Ambarella And Avoid GoPro

There's no doubt GoPro (GPRO) cameras were popular over Christmas and will continue to be so in the coming quarters. It is a very strong business, so it makes sense that investors would want to get in on the action. However, directly buying GoPro stock is not the way to go. Instead, you should buy their supplier, Ambarella (AMBA), which does not suffer from the problems that GoPro highlighted in its most recent earnings call.

Both GoPro and Ambarella were falling after hours on Thursday after GoPro reported earnings, despite having beaten estimates by a large margin. GoPro was falling significantly more though - 15% compared to Ambarella's 4%. The latter's dip doesn't even counter Ambarella's gains during the regular trading day on Thursday (4.8% up). This is a result of high expectations, mixed guidance and managerial changes. In this article I'm going to cover why this earnings event was… Read More …