What happened
Investors following action camera maker GoPro (GPRO -1.12%) knew the company was on track to make a profit in 2021, after five straight losing years. But January 2022 still marked a 14.1% decline in the company's share price, according to data provided by S&P Global Market Intelligence.
So what
The company officially reported its fourth-quarter and full-year 2021 results subsequent to the end of the month, and shares gained back some of that January drop. But holdings of longer-term investors that have held shares for the last 12 months are still down more than 15%. That's likely because while the company is working to execute an ongoing turnaround, the prospects for its future still look hazy.
Image source: Getty Images.
Now what
GoPro has been working to transition its strategy to become more of a direct-to-consumer subscription business for its users and fans. It has also aimed to expand share of its higher price point offerings. For the full year 2021, 97% of its camera revenue came from cameras with retail prices at or above $300. That compares to 89% of revenue for its higher-priced products in 2020.
It is also trying to generate continuing income from customers through subscriptions. GoPro ended 2021 with about 1.6 million subscribers, representing a 107% year-over-year increase. Direct-to-consumer -- which includes both online and subscription revenue -- grew to become 34% of total revenue for the full year 2021.
Total revenue grew 30% in 2021 versus the prior year. At its recent share price, that values the company at a price-to-sales ratio of below 1.2. Yet January's stock slump means that investors don't currently think shares are a bargain. That likely is because it remains questionable that GoPro's recent growth is sustainable. 2021 was GoPro's first profitable year since 2015, and the lack of a more diversified product base potentially has investors wondering what might come next.
For investors that believe 2021 was just the start of GoPro's return to profitability, shares could indeed be a bargain right now. But it remains to be seen if the company can continue to grow and generate cash with its existing product suite. If it can, there may not be many more months with double-digit drops like January 2022
