Shares of GoPro (NASDAQ:GPRO) moved nicely higher last week after unveiling several new products and services. It's only fitting that it should come under pressure this week after potential rivals stormed the scene with their new gadgetry.
GoPro stock dipped on Monday and Tuesday -- only to make some of that back on Wednesday -- after Snapchat's parent company introduced camera-equipped sunglasses. Called Spectacles, of course, the glasses will shoot 10-second video clips on demand. There is no release date for the $129 specs, but it's easy to see why they will be more successful than the original Google Glass experiment. The price point, for one, is a lot cheaper on Spectacles. Snapchat is also a platform that's big with millennials, with more than 40% of them on Snapchat on any given day.
Armed with more than 100 million active daily users and serving up more than 10 billion video views in any given day, there's no denying the appeal of Snapchat with GoPro's target audience. If Snapchat is putting out what is essentially a wearable camera, it has to be something that GoPro investors should watch closely.
However, it's hard to see Spectacles eating into sales of Hero5 during the holiday quarter -- and not just because we don't know when the heck Snapchat's shutterbug eyewear will hit the market. The 10-second clip limit on Spectacles is perfect for Snapchat, but it's a far cry from what GoPro camera owners are trying to capture. Hero wearers are also typically on the go, and that may not make a pair of sunglasses the fashion accessory of choice.
Karma cuts both ways
Another challenger emerged -- and this time, a more direct attack -- when drone maker DJI unveiled the Mavic Pro. The market cheered last week's unveiling of GoPro's first push into this market with the Karma drone that will hit the market in late October, but even then it was assumed that DJI would be its biggest threat.
DJI's Mavic is also a foldable quadcopter with an impressive spec sheet and a competitive price point. It also has a next-gen "follow me" feature that Karma lacks. GoPro put out some pretty impressive clips in the days leading up to last week's announcement, but DJI's promotional clip is pretty impressive.
This will be a more formidable opponent. However, GoPro is the one brand that millennials are familiar with -- and knew well, even before the company got into the drone niche. It's also fair to say that GoPro has a lot more riding on the Hero5 and Hero5 Session than the Karma drone during the upcoming telltale holiday shopping season.
Wall Street likes GoPro's chances
A couple of analysts chimed in with bullish thoughts on GoPro this morning. Oppenheimer's Andrew Uerkwitz feels that Karma and Mavic are serving two different audiences. Mavic is raising the bar for high-end consumer drones, but he sees Karma more as a versatile flying camera system, given its ease to transition into handheld mode.
BankofAmerica/Merrill analyst Jason Mitchell also feels that, while DJI Mavic may be the drone of choice for enthusiasts, GoPro will be the bigger hit with casual consumers and those eyeing drones for film projects. He is not tweaking his sales targets for the holiday quarter, but mostly because he doesn't see Karma as a big driver for the period.
The real test will come next year, but Mitchell still feels that GoPro can walk away with a 4% to 5% share of the drone market. That may not seem like much, but it's also why the DJI Mavic threat is overblown. GoPro will do just fine with its Hero5 camera, and its Karma drone should woo a fair share of early adopters.