GoPro (GPRO 6.82%) has had quite the ride since going public in June 2014 at $24 per share. The stock doubled in its first week and nearly quadrupled by October. But the last few months have brought the stock crashing down to reality. So, where does GoPro stand today?
We know more about who GoPro is
When GoPro hit the market, there were a lot of questions about whether it would be able to maintain its torid growth rate, how CEO Nick Woodman would be as a public CEO, and if the replacement cycle of GoPro was longer than investors would like for a product company. But financial results have been the least of GoPro's problems.
In the fourth quarter, GoPro reported revenue of growth of 75.4% to $633.9 million and earnings of $0.99 per share, crushing its own estimates of $550-$580 million in revenue and $0.65-$0.69 per share in earnings.
Financially, GoPro is on more solid footing than it was when it went public and management has shown the ability to hit even their own lofty growth goals.
GoPro may soon challenge some of its drone competitors. Image source: DJI.
New products will be key for the future
What we haven't seen since GoPro came public is an expansion into new products. It has launched Hero 4, new accessories, and editing software, but hasn't moved beyond its core GoPro digital camera product. Long-term, it will need to broaden its scope to continue its growth.
The good news is that there are a number of options for growth. Launching a drone seems like a natural fit since GoPro Hero is already integrated into many drone designs. The FAA recently opened up the skies to limited hobby and commercial drone use, which would be perfect for GoPro. Other drone makers are starting to make drones with their own cameras, so why not win back some of that business by making a drone.
There may be no other company who could lend credibility to a drone as quickly as GoPro either. If done correctly, a GoPro drone could be an overnight success.
Woodman may also want to move beyond just cameras. GoPro has become a lifestyle brand and moving into other lifestyle gear would make sense. Eventually, he'll have to move GoPro into more than just cameras.
GoPro is a better investment today too
Given the fact that GoPro has demonstrated growth and is reportedly moving into new product lines, I think it's a far better investment than it was when it went public. The good news is that shares are nearly back to where they were when they went public too, giving investors a little more value.
Shares aren't cheap at 23 times forward earnings estimates, but how many companies do you know that can grow at 75% and do so profitably?
I think big things are ahead for GoPro and this has a chance to be one of the great brands of the next decade. But a lot is riding on the focus of CEO Nick Woodman, who could be the company's great visionary founder or its greatest obstacle to becoming a mature company. How he handles the company's growth and the launch of new products will tell whether or not the stock is headed for the stars or crashing down to earth.
