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Why GoPro's Shares Plunged 15.3% Today

By Travis Hoium – Apr 15, 2020 at 3:43PM

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Investors are questioning whether GoPro can survive long-term.

What happened 

Shares of action camera company GoPro, Inc. (GPRO 2.75%) plunged as much as 15.3% in trading Wednesday as investors looked for safer stocks. Shares were still down 12% as of 3 p.m. EDT and show no signs of bouncing back today. 

So what

There wasn't any GoPro specific news out today, but this week the company started discounting its best-selling action camera. The Hero8 Black is now available for just $299.99 and a package with a memory card and accessories is just $349.99, a $100 discount. 

GoPro cameras and accessories.

Image source: GoPro.

GoPro doesn't typically discount products in the spring, so it must be trying to clear inventory to generate cash. I recently wrote that the shutdown of travel and action sports may lead to further financial difficulty at GoPro given that it wasn't profitable even before the COVID-19 pandemic. 

Now what

It doesn't help that the stock market overall is down today, and as a highly volatile stock, GoPro will feel the brunt of the decline. The S&P 500 is down 1.8% as I'm writing and fell as much as 3% in trading this morning. 

Given GoPro's 37% decline in 2020 and the fact that it has a market cap of just $426 million, it's worth wondering whether the company can survive the current crisis. It had $148.8 million of long-term debt and $165.1 million of cash and marketable securities at the end of 2019, but that's usually the peak financial condition for the company after the holidays. This year, it'll likely burn cash and may have a weak holiday season, which could put more financial stress on a company that was already struggling to make money in action cameras today. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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