GoPro (GPRO 0.54%) shares started this year extending a sell-off that's been in place since the middle of 2021. Revenue has been declining over most of that time, and the company hasn't turned a quarterly net profit since early 2023. The struggling company appears to be moving backward rather than forward.
Something seems to have changed for the better in the middle of this year, though. On the surface, that something was the launch of an artificial intelligence training program meant to monetize some of the 13 million hours of video that GoPro users have saved in the company's cloud service. Shares have gained more than 40% since GoPro jumped into the AI craze with this initiative.
But can the rally last?
NASDAQ: GPRO
Key Data Points
No real revenue recovery on the radar
GoPro remains one of the world's top makers of action cameras and related equipment, but that's not the issue. With the exception of a small number of hardcore content creators, however, the action camera craze is kind of over. And to the extent that consumers are still interested in recording action videos, most smartphone cameras are powerful enough to do the job, while well-informed consumers are finding that more affordable alternatives like DJI's recently released Osmo Action 6 work just as well.
Image source: Getty Images.
So what sparked this stock's surprising rally? The company's move into the AI training space was the most obvious catalyst but not the sole reason. Rather, GoPro became a meme stock (again), attracting speculators who drove shares 41% higher on July 22. The bulls have won out so far with GoPro stock up about 160% in the past six months, but with more than 14% of the stock's float sold short, the bears clearly aren't giving up. They're still looking for ways of bringing the stock back down to make their short positions profitable.
The thing is, there's a good chance they'll do it. There's nothing on the near-term or long-term radar that suggests interest in premium, stand-alone action cameras is going to be rekindled in a big way anytime soon, if ever. In the meantime, while moving into the artificial intelligence training market is a creative and timely move, the depth of such a need isn't clear. And if there is significant need, know that Alphabet's YouTube is being used for the same purpose, leveraging its much bigger library of video content for little to no cost to AI training platforms. GoPro isn't likely to be able to effectively compete with that.
Bottom line? Its action cameras remain some of the best on the market. There's nothing to suggest, however, that GoPro's fiscal results are poised to take a much-needed turn for the better, despite its push into AI. The recent gains aren't likely here to stay.
