What happened
Shares of action camera company GoPro Inc (GPRO 22.94%) jumped 16.2% in June, according to data provided by S&P Global Market Intelligence, as shares continued to respond nicely to a reduction in the company's camera prices.
So what
GoPro's shares have been moving steadily higher as investors bet the company's new pricing model that has cameras selling for $199 to $399 will resonate with consumers. It's speculation about how the company's actions will impact future earnings that investors are betting on further.
Image source: GoPro.
The biggest change in June was announcing Ty Ahmad-Taylor, who is an executive at Facebook, as a board member. The move adds new media heft to the Board of Directors and may bring the company a little closer to important platforms like Facebook, Instagram, and Facebook Messenger. Products like GoPro QuikStories are intended to be an easy video upload on social media networks, so having a social media executive isn't a bad idea for GoPro.
Now what
GoPro has bet its company on the idea that it can make more money selling lower margin cameras at a high volume than high margin cameras at a lower volume. But that's a risky bet given the fact that one of GoPro's main challenges the last three years has been shrinking margins.
I think the euphoria over GoPro's stock is yet to be earned, but that won't last long. The company should announce earnings around the end of this month and its next-generation Hero cameras should be announced late this summer or early in the fall. Results from operations and new features in cameras are what could drive a continued result, but right now the move in GoPro's stock is based purely on speculation.
