What happened

Shares of camera company GoPro (NASDAQ:GPRO) crashed 31% in March, according to data provided by S&P Global Market Intelligence. While the impact from COVID-19 on GoPro's business isn't immediately apparent, there is a case to be made. GoPro cameras are frequently used for outdoor activities -- activities that are being suppressed by stay-at-home guidelines.

Some investors are even already speculating about what slow sales now could mean for a potential new product launch later in the year.

A person holds a GoPro MAX in an outdoor place.

The GoPro MAX camera. Image source: GoPro.

So what

An analyst from Oppenheimer suggested GoPro's sales have dropped because of the coronavirus. However, GoPro itself has yet to release any business update regarding COVID-19. Therefore, the suggestion that camera sales are falling is just a guess. But it is reasonable speculation. GoPro cameras are frequently used for outdoor activities, and consumers aren't likely stocking up on consumer-discretionary products like action cameras at the moment.

GoPro has annually updated its product lineup in either September or October for the last four years. Management is secretive with its future product roadmap, but it's also reasonable to assume it was planning a new product launch in 2020. But launching a new product when the old one is collecting dust on the shelf could result in the company discounting current merchandise to avoid writing off unsold inventory. 

Considering these speculative coronavirus risks, and factoring in GoPro's weak growth potential to begin with, it's not surprising to see investors flee the stock.

Now what

Camera sales aren't the only way GoPro generates revenue; it also sells a subscription service called GoPro Plus. There are now over 300,000 subscribers and that base was still growing fast as of the company's fourth-quarter earnings call. Plus subscribers were up 69% year over year, and CEO Nicholas Woodman was guiding for between 600,000 to 700,000 subscribers in one year.

Even if this lofty goal is hit, it's not likely to move the needle much for GoPro. At $4.99 per month, subscriptions would only add up to between $35 million and $40 million in annual revenue. For perspective, total 2019 revenue was $1.2 billion.

Trading at just 0.3 times trailing revenue, one could make the case that GoPro shares are undervalued and present upside here. However, it's better to invest in companies with a strong business opportunity than for just a valuation-multiple expansion. So even though it's trading near all-time lows, I'd still stay away from GoPro stock.