3 Reasons to Buy GoPro's IPO

GoPro presents an interesting opportunity for investors when it hits the market.

Jun 24, 2014 at 3:05PM

GoPro is due to hit the public markets Wednesday in one of the most anticipated initial public offerings of the year. The company is expected to sell 17.8 million shares to investors and will be worth around $3 billion if the price holds true.

Like many young companies, GoPro is just scratching the surface of its potential. Devices are becoming more wearable and GoPro has built a brand that can take advantage of that. Let's look at why I see upside for GoPro's IPO.

Gopro Image

GoPro's line of accessories is almost as important as the camera itself. 

More than just a Hero camera
The GoPro Hero line of cameras is GoPro's portfolio that provides a vast majority of the company's value, but it's now expanding to apps and software that make the experience more user friendly. The latest Hero 3 line offers a wireless connection that allows users to see what they're shooting instead of shooting blind like in the past. The next step is it to stream action sports directly through your GoPro camera using a wireless connection, and it shouldn't be far away. 

In the future, I think we'll also see the product line expand to smaller wearable cameras that don't require the bulky mounts the Hero 3 does. The number of applications is almost endless from small drones to remote control cars to wearable glasses. Athletes have been mic'd up on the field for years so why not add cameras to the mix?

The technology behind GoPro's cameras is improving so quickly that I would be shocked if GoPro didn't set its sights on more markets. GoPro's key partner Ambarella (NASDAQ:AMBA), who makes video compression chips, is already guiding the way by moving into security applications, automobiles, and other wearables. If you're looking to get in on GoPro's growth but want a little diversification, Ambarella would be great to pair with GoPro because it is a key supplier to the company along with having other end markets.

Dji Drone With Gopro Image

GoPro Hero cameras are even being designed into small drones like this one from DJI. Source: DJI.

The challenge with projecting product expansions is that you're putting faith in management. But that's where I think GoPro has a solid foundation.

An energetic and visionary CEO
When buying an IPO, the most important person you're investing in is the CEO. In GoPro's case, Nick Woodman is the quirky, energetic, adrenaline junkie who runs this emerging company. He was the one who had a vision to build a camera that could be used for action sports and it was his experimentation with the camera that created the functionality and accessories that make GoPro so easy to use today.

Woodman has the entrepreneurial spirit that has driven innovation in Silicon Valley for decades and with the growth in popularity of action sports and recording and editing video he has built a perfectly positioned company. We may not know what he has up his sleeve next, but given the way he's built GoPro into a profitable camera power he's not someone I would bet against.

A faster replacement cycle than you think
One of the common criticisms of GoPro is that you don't need to do business with the company once you buy a camera. This is true in theory, but the reality is that GoPro is constantly updating its technology and users will want to upgrade as it does. There are also changing form factors, which require constant accessory upgrades.

As GoPro brings Wi-Fi, streaming, and new form factors into its product line the replacement cycle will continue, just like it does with cell phones, computers, and tablets. We'd like to think that one device is enough but the improvements two or three generations down the line are often too much to pass up. The same will be true with GoPro if it can keeps its innovation engine going.

Why you should jump into this IPO
I think there's enough skepticism about GoPro's business to provide an incredible opportunity for investors. The company is still growing its installed base, technology for cameras and software is improving, and the demand for smaller, more wearable cameras is only going to increase. That puts the company in prime position to capitalize, and with a brand that defines action sports it's a name the market should love as well.

Leaked: This coming consumer device can change everything
Imagine the multi-billion dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  

Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Ambarella. The Motley Fool owns shares of Ambarella. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information