GoPro Inc

GoPro, Inc. (NASDAQ: GPRO) produces cameras, and mountable and wearable accessories. The Company offers a family of flagship cameras, including its cloud connected HERO12 Black, HERO11 Black, HERO11 Black Mini, HERO10 Black, HERO10 Black Bones, HERO9 Black, and MAX cameras.

Recent Financial and Business Updates:

• Q1 2024 Financial Performance
  • Revenue Decline: GoPro's revenue for the first quarter of 2024 reached USD 155 million, representing an 11% decrease compared to the same period last year. However, subscription and service revenue witnessed a positive growth of 12% year-over-year, totaling USD 26 million.
  • Subscriber Growth: GoPro's subscriber count at the end of Q1 stood at 2.5 million, marking a 6% increase from the previous year.
  • Channel Revenue Composition: Revenue from the retail channel amounted to USD 106 million, constituting 68% of total revenue and registering a notable 33% increase year-over-year. In contrast, GoPro.com revenue, which includes subscription and service revenue, was USD 49 million, accounting for 32% of total revenue and experiencing a decline of 48% year-over-year.
  • Net Loss and Gross Margin: The GAAP net loss for the quarter was USD 339 million, translating to a loss of USD 2.24 per share. This significant loss was primarily attributed to the recording of a USD 295 million tax valuation allowance. Excluding this charge, the non-GAAP net loss was USD 32 million, or USD 0.21 loss per share. Both GAAP and non-GAAP gross margins were reported at 34.1% and 34.4%, respectively, showing improvement from the previous year's figures.
  • Adjusted EBITDA: Adjusted EBITDA for Q1 2024 was negative USD 29 million, compared to negative USD 28 million in the same period last year.
  • Product Revenue Composition: Cameras with Manufacturer's Suggested Retail Prices (MSRP) at or above USD 400 contributed to 70% of camera revenue in Q1 2024, while entry-level products accounted for 20% of camera revenue. The average selling price (ASP) for Q1 2024 street cameras increased by 5% year-over-year, reaching USD 395.
  • Cash Position: At the close of the first quarter, GoPro's cash and marketable securities totaled USD 134 million. 

• Recent Business Developments
  • Acquisition: In February 2024, GoPro finalized its acquisition of Forcite Helmet Systems, an Australian company specializing in tech-enabled motorcycle helmets.
  • Product Releases: Also in February 2024, GoPro launched the Quik Desktop App for macOS and introduced a new subscription tier priced at USD 99.99, named Premium+. These initiatives signify the company's commitment to product innovation and expanding its service offerings.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI), calculated over a 14-day span, stands at 37.35, currently recovering from oversold zone and forming a bullish divergence, signifying the likelihood of either some consolidation or a trend reversal towards the upside from the current levels. On the other hand, the stock presently finds itself positioned below both the 21-day and 50-day Simple Moving Averages (SMA), which could function as a dynamic short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to GoPro, Inc. (NASDAQ: GPRO) at the closing market price of USD 1.66, as of May 13, 2024.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 13, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.