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Why GoPro's Stock Buybacks Failed Spectacularly


When done well, buyback programs can increase a company's earnings per share, which oftentimes translates into a higher share price. When done badly, however, they can rob a company of capital that could otherwise be invested back into the business.

In this segment from the Industry Focus: Tech podcast, Dylan Lewis and Sean O'Reilly use GoPro as a cautionary tale of how a company should not launch a buyback program. Listen in to find out why GoPro's recently announced repurchase initiative was a bad idea, and how badly the company has performed since unveiling it.

A full transcript follows the video.

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This podcast was recorded on April 15, 2016.

Dylan Lewis: I'm taking the company that did not do such a great job. I'm going to talk about GoPro. So, based on profiling, like we talked about in the first half of the show --

Sean O'Reilly: Why are you hating on GoPro, Dylan?

Lewis: I mean, I'm an Ambarella shareholder, so I want to see GoPro do well. But, based on what we talked about in the first half of the show, by all indications, GoPro is in that growth phase, and they should be fueling R&D.

O'Reilly: They just went public.

Lewis: Yeah, within the last two years.

O'Reilly: They do not have a dominant market position, they are not minting cash flow.

Lewis: Yeah. They're in a nascent consumer tech market. But, in the fiscal Q3 call last October, they announced, "Our board of directors has recently approved a stock repurchase plan of up...