What: Shares of action camcorder maker GoPro (NASDAQ:GPRO) fell 19.5% in February, according to S&P Capital IQ data, as Mr. Market ignored a positive quarter and disappointing first-quarter guidance, a surprise C-level executive departure, and a lockup expiration took their toll on the stock's returns.
So What: The first big drop for GoPro came following its earnings report in the after-hours market on Feb 5. After running up as much as 15% while reporting its fourth-quarter earnings of $0.99 per share, up from $0.33 the year prior and above the consensus estimate of $0.70, the stock quickly reversed after estimating first-quarter earnings of $0.15 to $0.17 per share, lower than the consensus estimate of $0.17. In addition, the surprise resignation of COO Nina Richardson added to investor skittishness. GoPro opened trading on Feb. 6 down 11.7%.
The stock took another downturn on Feb. 18 after a secondary lockup expiration. On that date, 76 million shares were placed in the market for the first time. The added supply drove down shares 11.2% that day, although it should be noted shares were bid up by the matching amount before the expiration.
Now what: GoPro's story can be best summarized by the first downturn. After playing up its social-media ambitions, without a well-formed plan to monetize content, the stock was bid up to atmospheric valuations any consumer electronics company would have problems maintaining. And that's why GoPro fell 12% after blowing past analyst expectations, because so much growth was baked into its valuations. Considering the company is now valued at less than half of its all-time highs, the stock is no longer dependent on eye-popping growth to enrich investors.
Recently, I took a position in GoPro as I feel the falling stock price -- it's continued to fall in March -- and incessant bullishness has worn off and the company continues to operate well fundamentally. GoPro will continue to be a volatile stock, but I feel its brand cachet and unique value proposition will enrich patient, long-term investors.
Jamal Carnette owns shares of GoPro. The Motley Fool recommends GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.