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GoPro's Future Is Foggy Despite Picture-Perfect IPO

In the consumer electronics space, only Apple (AAPL) has been able to stem the tide and maintain healthy margins. With Apple's brand recognition and supply chain advantages, Apple can demand the prices it wants from OEM chip manufacturers to ensure its long-term profitability.

To the extent GoPro can build such an advantage, GoPro's profits should be fine. But it's taken Apple years to develop that sort of leverage, which allows it to price its products at a premium.

While GoPro, whose camera range from $199.99 to $399.99, can certainly enjoy a few more years of premium pricing, Samsung and Sony can put an end to that. The bull case for GoPro is  its cameras are available in over 100 countries. Both Samsung and Sony have a much wider global reach.

Even with Sony's strong position in video game consoles, Sony is still struggling to produce a profit. And look how quickly it was for Samsung to disrupt Apple's smartphone position. By dropping its pricing Samsung became the world's largest handset company while hurting Apple's margins in the process.

This aggressive tactic forced Apple to look into other device categories and software services. Apple was forced to think different. At this point, GoPro needs that quick-pivoting ability more than its surging stock price. Only the former ensures long-term viability.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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