GoPro's Going Public

Action camera manufacturer GoPro filed plans on February 7 for an initial public offering, or IPO, as the company ratchets up plans for expansion and maintaining its industry-leader reputation. Will GoPro be an attractive investment when its shares go on sale, or should investors stay on the sidelines? Based on favorable market conditions for big tech IPOs and GoPro's seemingly good financials, investors should keep their eyes on this IPO as a potential investment opportunity. However, until more details are released about GoPro's financial picture I'll have tempered optimism for the company's future prospects.

GoPro's strong position
GoPro has come a long way since its humble beginnings in CEO and Founder Nick Woodman's van. Woodman founded GoPro with $64,000 of his own money and $10,000 from his father. Now, GoPro cameras are the best-selling cameras in the world. The cameras are sold in 50 countries around the world and they are widely recognized as some of the best action cameras in the market. The expensive-yet-effective GoPro camera products are favored by many athletes and local city workers like police and firefighters.

The company's products have been consistently praised for their video quality, portability, workability, and hardiness by analysts and reviewers, earning top ratings over competitors like Sony (NYSE: SNE  ) . GoPro is primed for continued growth and erosion of Sony's camera sales, especially considering Sony's recent credit downgrade and decision to spin off its TV business. Sony is dealing with its own financial troubles and as of yet hasn't been able to catch up to GroPro's success in the camera business, thus GoPro would be the company to own in the camera space. Until Sony can demonstrate it can get its debt under control and make headway against fellow competitors, I'm content to just keep my eyes on developments at Sony for now.

Although much of GoPro's specific financials remain shrouded in secrecy, we do have some big pieces of the puzzle to work with. The overall market atmosphere is quite favorable for splashy tech IPOs like Twitter (NYSE: TWTR  )  as the company's shares have risen meteorically after it went public. Investors seem to be hungry for shares of Silicon Valley companies despite concerns over Twitter's stumbles in its most recent quarterly report. Until Twitter can show consistent increases in its user base and can demonstrate that its monetization efforts are working, I'm sticking on the sidelines of Twitter's highly volatile stock.

In November 2012, CEO Woodman reported that GoPro's revenue was doubling annually and it was over $500 million during 2012.  PetaPixel reports that "The last time GoPro raised any funding was in December of 2012, at which point the company was valued at a whopping $2.5 billion. Considering their revenue has more than doubled since then, the IPO is expected to value GoPro well into the billions." 

However, WatchListNews insinuates that GoPro's decision to file privately with the Securities and Exchange Commission, or SEC, suggests the company fell short of its prior fast growth rates in fiscal year 2013. Currently, we don't know anything about how many shares GoPro will offer or what exchange GoPro is planning on having its shares listed. So, while the valuation of the company at this point seems reasonable based on optimistic future projections, until we know how richly the IPO values GoPro as well as the company's official revenue numbers, investors probably shouldn't get too excited about the GoPro IPO just yet.

Overall, while GoPro has much room to expand in domestic and international markets and it holds key competitive advantages in the action camera business, I'd wait until more specifics about the IPO come out before running to buy stock in the company. GoPro certainly looks more attractive then either Sony or Twitter and has exciting prospects for the future.

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  • Report this Comment On February 19, 2014, at 11:51 AM, KayakerRW wrote:

    GoPro's cameras are a great product, with a large potential customer base. People like to take actions shots and videos of their activities and post them online via YouTube, Facebook, Snapchat, etc.

    Whether a great product translates into a good investment is always a puzzle.

    In addition to the valid points you raised, I'd also like to know about their moat. How difficult will it be for another company to enter the market and take away business the same way they have done to Sony?

    I do know that in the kayaking world, just a few years ago, camera questions would involve discussions about which brands. Now the questions tend to be: "Which GoPro? & Which accessories?"

    However, that trend could change. If it continues, that would be good news for potential investors.

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