What happened
GoPro (GPRO 5.92%) investors beat the market last month as the stock gained 5% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.
The boost wasn't enough to put shares into positive territory so far this year. But it did push returns slightly above the S&P 500's 12% decline since early January, making GoPro a standout in the tech industry.
The rally was powered by rising optimism about the business' growth potential in 2022 and beyond.
Image source: Getty Images.
So what
GoPro gave investors several good reasons to feel optimistic in its last earnings announcement. In early February the company revealed that profitability is jumping and demand remains high for many of its sports cameras. A shift toward a more subscription-based selling model is also boosting cash flow and promising to generate more sustainably rising earnings. GoPro navigated through supply chain challenges through late 2021, as well.
There was a big-enough gap between those encouraging operating results and the stock's decline through January to create a solid rally in GoPro's shares, which continued into April.
Investors are especially excited about what the company might have to say about its 2022 outlook when GoPro announces fiscal first-quarter results later this week.
Now what
GoPro will report Q1 earnings after the market closes on May 5. That announcement is expected to show continued solid sales gains, with revenue rising about 16% compared to 9% in the previous quarter.
GoPro's devices might see a strong demand spike as the summer travel season heats up, and executives will likely discuss early indications of that sales boost in Thursday's conference call.
Of course, it's possible that GoPro struggled to keep inventory moving through its supply chain in early 2022. Rising prices might begin turning consumers off to its cameras, many of which retail for over $300 each. But so far these challenges haven't pinched the business. On the contrary; average selling pries in 2021 jumped 17% to $369 even as sales volumes rose.
If GoPro reports similarly strong pricing and demand trends later this week, I wouldn't be surprised to see the stock extend its April rally further into the month of May.
