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Why GoPro Stock Skyrocketed 34.4% Last Month

By Keith Noonan – May 11, 2020 at 12:03PM

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The camera company is making moves to reduce expenses, but the business is facing big challenges.

What happened

Shares of GoPro (GPRO -1.76%) climbed 34.4% in April, according to data from S&P Global Market Intelligence. The camera company's stock bounced back last month after sliding 31% in March.

^SPX Chart

^SPX data by YCharts

Image source: Ycharts.

GoPro stock got hit hard in March's coronavirus-driven sell-off, but shares saw recovery in April thanks to momentum for the broader market. The stock is still down roughly 24% year to date despite last month's big gains.

A GoPro Hero8 camera with a display modification attached.

Image source: GoPro.

So what

GoPro has been struggling as commodification in the action-camera space has led to declining sales and margins, and its efforts to bolster the business with an online-platform component have failed to move the needle. Shares saw substantial positive momentum in April after hitting a lifetime low in March, but the company's long-term outlook appears dim unless it can come up with new products to reinvigorate consumer demand.

Now what

GoPro stock has lost some ground in May's trading. The company's share price is down roughly 6% in the month so far. 

^SPX Chart

^SPX data by YCharts

GoPro published first-quarter results on May 7, reporting revenue and earnings that were in line with the market's expectations. Sales for the period fell roughly 51% year over year to come in at $119.4 million, and the company's non-GAAP (adjusted) loss per share was $0.34 -- expanding from its $0.07 adjusted per-share loss in the prior-year period. 

GoPro suspended its full-year guidance0 with a press release in April, but CEO Nicholas Woodman said during the company's first-quarter call that the business was starting to see demand rebound after the slowdown created by the novel coronavirus. GoPro is aiming to boost profitability by reducing expenses and building direct-to-consumer sales -- which generate higher margins than sales through third-party retailers.

The action-camera company is valued at roughly 0.75 times the average analyst target for this year's sales.

Keith Noonan 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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