What: Shares of GoPro (NASDAQ:GPRO) were down 15% as of 11:30 a.m. EST after Morgan Stanley analyst James Faucette downgraded shares of the action-camera specialist from neutral to underweight.
So what: Faucette simultaneously lowered his price target on GoPro shares to $12 from $23, citing a combination of high inventories related to consumers' "weak response" to GoPro's HERO4 Session camera -- which the company has dubbed its most convenient device yet, thanks to its size and one-button controls -- as well as his belief that the situation likely won't resolve itself anytime soon as "key challenges of off-loading, storage and editing content have not been adequately addressed for a product intended to be 'taken anywhere to record everything.'"
In other words, Faucette is concerned GoPro's video processing software is still inadequate to effectively convince users the HERO4 Session's relative convenience is worth its freshly lowered $199 sticker price.
Now what: That's not to say Faucette's view is entirely surprising. I voiced similar concerns over the HERO4 Session only last week, noting this marked its second price reduction since launching five months ago. And with the backdrop of new marketing initiatives from GoPro intended to make up ground after the botched launch, it seems GoPro's efforts to hawk its wares are indeed falling flat.
At the same time, you can't help but wonder whether these concerns were already reflected in GoPro's share price. Down 74% year to date, GoPro stock is now valued at roughly two-thirds the company's $24 IPO price and just 13.3 times trailing-12-month earnings. And if GoPro can rejuvenate consumer interest with new high-end cameras, its recently named Karma drones, and innovative VR solutions in the coming year, I won't be the least bit surprised if this drop turns out to be a buying opportunity. But for now, it's evident Wall Street maintains its disdain for this former market darling.
Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and 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.