In this segment from our MarketFoolery podcast, Mark Reeth and Million Dollar Portfolio's Jason Moser consider where GoPro (NASDAQ:GPRO) will head following a long and unpleasant share price and sales decline. The investment thesis, Jason says, is busted. Even if GoPro has a good holiday season, how sustainable could a recovery be?
A full transcript follows the video.
This podcast was recorded on Sept. 14, 2016.
Mark Reeth: @benembiricos asks, "Are there any reasons for optimism for GoPro shareholders? It's been a grim 12 months." That is true. In the last 12 months, GoPro is down 63%. Where is the optimism? Where is the ray of hope?
Jason Moser: Well, he's sitting right next to me here and his name is Mark Reeth, right? No, I'm just kidding. You're an optimistic guy, though. I like that. I don't know that I would be feeling so good about GoPro, though. At the very least, this is a busted thesis. The idea was that this was going to be a device maker. They were going to leverage that device in the content, and become very profitable in the process, and investors were just going to go off and just live happily ever after, and that has basically turned out to be the opposite, and the problem is that they've never really been able to leverage that content and when you're just a device maker, at some point, that device becomes commoditized. You get stuck competing on pricing. You lose your margins and things just go south really quickly, and that's what's happened to GoPro. Now, in the short run, in the near term here, because this is what, September now. We know this coming holiday season, they have some new products that are rolling out.
It's very possible they have a good holiday season. If they have a good holiday season, it's very possible the market will react positively to that. Again, you have to ask yourself the question, "If that does happen, how sustainable is that?" I don't think it's going to be very sustainable because they're just going to be stuck on that hamster wheel of having to come up with something new every holiday season. When I look at this from an investor's perspective, I would stay away. If you own it, you're going to make the decision on your own because I certainly see the potential for a near-term catalyst if they have a good holiday season, but that's a big if. I just don't know, but I definitely would not have Go Pro at the top of my list today.