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Can GoPro Keep Going After Last Week's 15% Pop?

By Rick Munarriz – Sep 25, 2016 at 9:30AM

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The wearable-camera maker surges after introducing the Karma drone, Hero5 camera, and GoPro Plus subscription platform.

Image source: GoPro.

A new product cycle is shining kindly on GoPro (GPRO 1.84%). Shares of the leading maker of wearable cameras soared 14.6% last week, fueled by a well-received media event on Monday, when it unveiled new gear and services.

It was a pretty impressive suite of products and a subscription-based storage platform that GoPro rolled out. 

  • Karma is GoPro's first drone. The $799 foldable quadcopter was supposed to hit the market earlier this year, but it's finally ready to take flight with its Oct. 23 release date. It can be bundled with the new Hero5 or Hero5 Session for $999 and $1,099, respectively. It also is compatible with Hero4.
  • Hero5 is the wearable camera that follows 2014's popular Hero4. The wearable camera was also supposed to have hit the market earlier this year, but better late than never. It has an Oct. 2 release date, and a $399 price tag. The smaller Hero5 Session will set buyers back $299. Yes, the Karma drone bundle offers a $100 price break.  
  • GoPro Plus is a new data storage solution that gives subscribers the ability to store, edit, and share videos on the cloud. It will cost $4.99 a month, but it also includes access to a music catalog and a discount on mounts and other accessories.

Selling the dream

Not everyone is gushing about GoPro's new product lines. Stifel analyst Jim Duffy is sticking to his "hold" rating on the stock. He feels that Karma's high price tag and its failure to incorporate a "follow me" mode -- a feature available on most comparably priced devices that lets the drone follow the operator -- will make it difficult to stand out this holiday shopping season. He thinks Wall Street's forecasts of 20% annualized top-line growth at GoPro through 2018 is too aggressive. 

Piper Jaffray's Erinn Murphy is concerned that the drone's price-to-battery life ratio is unfavorable when pitted against the competition. She has an "underweight" rating on the stock, but she did boost her price target from $6.50 to $9. The bad news there is that the stock is already in the mid-teens.

J.P. Morgan analyst Paul Coster is bullish with an "overweight" rating, but he walked away unimpressed by the new features. He's sticking to his previous estimates.

Other analysts -- and, more importantly, investors -- see things differently. They see a potential turnaround for a stock that surrendered 71% of its value last year. The market for wearable cameras has changed since GoPro's peak during the 2014 holiday quarter, but the stock itself is also trading substantially lower than it was at that time. GoPro now has many new ways to score during this important holiday shopping season, and the real test will come next month, when the new products finally make their long overdue appearance in the wild.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. 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.

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