With negative sentiment growing, GoPro has set aside its high-flying valuation.
Under $30/share, GoPro's valuation looks attractive compared to other hardware companies in similar industries.
GoPro's dramatic fall from grace finally gives the stock an attractive risk/reward profile.
The rise and fall of GoPro (NASDAQ:
In the past, when analyzing the stock, you can take fundamentals and throw them out the window. GoPro's rise to $92 made about as much sense as it fall to $27/share in under 12 months. At its height, the stock sported a P/E ratio above 85 and a price around 9x total sales. Today, the stock sports a 24.7 P/E ratio and a P/S ratio of just 2.5. Even for momentum stocks like GoPro, at some point fundamentals start to matter. The question becomes, when does market sentiment become so negative that fundamentals start to take over?
Change in Market Sentiment
If you were to have followed analysts' recommendations and price targets in late 2014, you'd likely be down 50%-60%. There were no shortage of analysts to jump on the GoPro bandwagon when it was a high-flying momentum stock with zero fundamentals to support the ridiculous valuations. Analysts from
Now, after the stock has fallen over 50% YTD, there again is no shortage of analysts to jump on the negativity bandwagon and issue downgrades or cut price targets. Just in the last month, there's been a negative Barron's