Action-camera maker GoPro (NASDAQ:GPRO) went into the holiday season expecting a not-so-great performance. The company's fourth-quarter guidance called for revenue of $470 million, down from $541 million in the prior-year period.

But GoPro's results weren't lackluster. They were disastrous. The company announced preliminary fourth-quarter numbers on Monday that weren't even in the ballpark of its guidance. GoPro expects revenue to come in at just $340 million, a 37% year-over-year decline. Demand for its products was far weaker than it expected just a few months ago.

The Hero 6 Black camera resting on sand.

The Hero 6 Black. Image source: GoPro.

A lot went wrong

The Hero 5 Black camera, which launched in 2016, failed to appeal to consumers this holiday season. GoPro cut the price on Dec. 10, which helped sell-through at the expense of margins. "Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier," reads GoPro's press release. The company saw sell-through more than double in the two weeks following the price cut.

The new Hero 6 Black performed as GoPro expected during the holiday quarter, but the company is still slashing the price. The premium model now goes for $399, down from $499. Given the concerns about less expensive alternatives eating away at GoPro's action-camera market share, this price cut is not a good development.

GoPro's new spherical camera performed well, but the company is officially abandoning its highest-profile product. The Karma drone, once hailed as GoPro's savior before launching late and suffering a recall, is no more. GoPro will exit the aerial market after selling its remaining Karma inventory. Intense competition and a hostile regulatory environment were cited as factors behind the decision. The badly bungled launch didn't help, either.

Due to the drone-market exit and weak demand, GoPro plans to lay off hundreds of employees. The current workforce of 1,254 employees will be whittled down to fewer than 1,000. This will cut costs, but it's also an indication that GoPro's growth story is dead.

A buyout might be the best option

News broke Monday afternoon that GoPro has hired JPMorgan to explore a possible sale. CEO Nick Woodman, speaking to CNBC, commented on the company's plans: "If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at."

Whether GoPro ends up selling itself or not, it's clear that the company desperately needs new management. Its holiday results were downright awful, and its disastrous attempt to enter the drone market is the kind of mistake that well-run companies seldom make.

GoPro expects to return to profitability and growth in the second half of 2018, but at this point I wouldn't trust its ability to forecast anything. The stock looked interesting in December, with the prospect of a decent holiday season driven by new products. But the turnaround turned out to be a mirage. A buyout would be an unceremonious end to GoPro's run as a public company. At least longtime investors would be put out of their misery.

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