GoPro (GPRO - Get Report) has seen it's share price decline by 41% over the past year. Yet, in Thursday trade, the shares increased in value by more than 7% on speculation. Thank a circulated report that China's Xiaomi has contemplated acquisition.
Unless you indeed buy this name on pure spec, I can not for the life of me, even imagine spending five bucks on one share of this stock. For that money, I would rather buy a gallon and a half of gasoline, or maybe two gallons of milk.
Other than the fact that competition is fierce, and really anybody who can manufacture a camera can do what this firm does, what's really wrong with this company? The real question is where to even begin? Drones? No, GoPro already exited that business.
1) For Q4 2016, the firm reported EPS of $-0.30 on revenue of $338.4 (-38% y/y/), both numbers badly missing expectations. the firm reports Q1 2018 data on May 3rd. Expectations are currently for $-0.48 on about $175.4M. If they hit this revenue number, that would represent a 19.7% drop from Q1 2017.
2) Over the past year, gross profit margins have dropped from 41.3% to 26.6%, while Operating Margins have plummeted from a barely profitable 1.9% to -16.3%.
3) In that same span of time, book value has dropped from 3.16 to 2.18, and total debt has ballooned from nearly zero to $130 million. While current ratios remain a comfortable looking 1.55, and show improvement, once inventories are stripped out, the quick ratio languishes below 1.00, and you know what that means. (For you non-accounting majors, that means in theory that the firm could have a problem meeting short to medium term cash needs if forced to liquidate.)
Is solvency an issue? They do have some nice cash on hand, so .. no, not yet. That said, growth is certainly a problem.