Please ensure Javascript is enabled for purposes of website accessibility

Is GoPro Stock a Buy Today?

By Travis Hoium - Updated Apr 1, 2021 at 8:12AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

GoPro stock is rallying, but it may not be a great buy at today's price.

GoPro (GPRO 2.76%) stock has been through a wild ride in the last few weeks and is turning out ot be one of the early winners on the market in 2021. Share prices are up 40.6% so far this year, easily topping the S&P 500's 5.8% gain. 

Apparently, shares have become favored among Robinhood investors, and fellow Fool Howard Smith recently suggested that a short squeeze could be taking place. What makes this unusual as a short squeeze play is that there's no fundamental news driving the stock right now. The jump in stock price makes this a great time for investors to take a step back and ask if now is a time to reconsider this hot stock or, if already invested, to jump ship while shares are up. 

GoPro Quik app in edit mode on phones

Image source: GoPro.

GoPro's financial history isn't too impressive

This may sound crazy, but since going public in 2014, GoPro's financials have actually gotten worse. Yearly revenue has fallen nearly 10% since then to $891.9 million in the past year, and the company lost $66.8 million in 2020. This was once a highly profitable growth stock, but that story has changed. 

GPRO Revenue (TTM) Chart

GPRO Revenue (TTM) data by YCharts

The drop in revenue is partly because of competition from smartphones and other action camera companies, but the biggest problem is that GoPro hasn't found ways to expand its business. The core products in GoPro's lineup are still essentially the same as they were seven or eight years ago. 

All the tricks are out of the bag

Management so far hasn't found any logical way for GoPro to expand its product line. The company hasn't seen any success producing drones and it never gained traction in the media business. Today, it's stuck with a great action camera, but competes with dozens of other camera makers, effectively commoditizing its product.

A recent launch of the GoPro Labs firmware program has unlocked some interesting capabilities like motion detection, dashcam support, live streaming access, and more. But these features are still niche use cases for the GoPro camera and don't fundamentally change its product lineup or make this a growth stock. It seems at this point that all of the ideas GoPro had have been launched. 

Where does GoPro go from here? 

What's strange about GoPro's business is that it's tough as a stand-alone business, but it could be valuable as part of the ecosystem of a larger organization. For example, Garmin makes action cameras as well, but it also has smartwatches, aviation equipment, and even marine products. The ecosystem of products works together and makes the R&D and sales organizations more efficient. GoPro doesn't have that as a stand-alone company. 

Shares of GoPro may be on fire right now, but eventually, the company is going to have to live up to higher financial expectations. And that's where the investment thesis falls apart, which is why this isn't a stock I would buy today. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GoPro, Inc. Stock Quote
GoPro, Inc.
GPRO
$7.08 (2.76%) $0.19
Garmin Ltd. Stock Quote
Garmin Ltd.
GRMN
$104.55 (3.24%) $3.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.