Analysts believe if the deal does indeed go through, GoPro's high-tech product offerings would fit nicely into Apple's portfolio of best-in-class products.. Apple would benefit not only from GoPro's action cameras, but also from the rest of its diverse product offerings, including drones, virtual reality, and editing software.
A full transcript follows the video.
This podcast was recorded on Dec. 11, 2015.
Sean O'Reilly: So first and foremost is GoPro. Everybody's favorite, the highly active camera company, something. I don't know.
Dylan Lewis: Action camera? Never mind.
O'Reilly: Action camera. Well, I also think, is that the word I want to go for? Like, I don't know. Anyway, I've never jumped off a cliff with a camera on my head. Sorry.
Lewis: Fair. Have you seen Nick Woodman on Shark Tank recently?
Lewis: Pretty cool. It's weird to see him all buttoned up because he's usually like at the press events with a camera in his mouth.
O'Reilly: Oh, that's right, yeah. I'm sorry, I did see one episode. Actually, believe it or not, I'm not as big of a Shark Tank fan as my wife is. So, anyway. So GoPro. Market cap of $2.6 billion. Price to sales of a surprisingly reasonable 1.5.
For our listeners that don't know, are they profitable? What do they do? Why would Apple want them?
Lewis: Yeah, so they're the action camera manufacturer we were talking about. They are profitable. I think probably the most realistic of the four, for a variety of reasons, is also the only company out of the four to move on this news. Good testament to the fact that it's probably the most likely of those four for anything to happen with Apple. So you look at the valuation, you said price of sales 1.5, I think their trailing-12-month P/E is somewhere in the neighborhood of 15 right now.
O'Reilly: Also surprisingly reasonable.
Lewis: They're well below market for a particularly high-growth company. Their sales project out pretty well, at least for the common quarters. A lot of people are worried a little bit more about the long-term viability and ...
O'Reilly: Plus just competition.
Lewis: ... and market saturation, too, is an issue with them. But, so, on a valuation basis, it's the most attractive by far. I think also the product offering fits fairly well within Apple's consumer-tech expertise. It also plays well into the VR drone kind of future that a lot of people are forecasting out.
So I think that's why we saw this big move based on this news, and a lot of the headlines that I saw following this particular research report said, it was like, led with "GoPro Acquisition Target for Apple." And then it was like, also Adobe -- yadda, yadda, yadda. You know, so GoPro is the headline one by far. For what it's worth, GoPro was actually downgraded to neutral by Citigroup also this week. So, just goes to show analysts are all over the place, but that's kind of the run=down with them and why it might make sense.
Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple and GoPro. The Motley Fool recommends Adobe Systems. 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.