NEW YORK (TheStreet) - GoPro (GPRO) , the maker of high-definition personal cameras popular with action sports fans, shares slid more than 5% on Monday, despite analysts' optimistic expectations about the cameras' holiday sales.
GoPro is also developing a line of consumer drones with high-def cameras attached to them, The Wall Street Journal reported on Friday. The company is expected to begin selling the drones, priced between $500 and $1,000, in late 2015, the article said.
Shares were down 5.1% to $73.94 at last check. Here's what analysts had to say:
Brad Erickson, Pacific Crest Securities (Sector Perform)
"We braved third-party retail stores on Black Friday. We detected particularly strong demand for the discounted Hero 3+ Silver Edition, which was being bundled with various combinations of memory cards, accessories, mounts and/or additional gift cards depending on the retailer, for $250 (normal camera-only price is $300). Several stores we visited had sold out of their allotment on Thanksgiving evening, which was encouraging.
We found retailers still had plenty of Hero 4 (Black and Silver) inventory as of Friday midday. We think this was more of a case of being extremely well prepared for a busy holiday weekend rather than any disappointing sell-through. We will be watching for how Hero 4 sell-through tracks from here, as we believe this will be key if GoPro is to see a better-than-seasonal March quarter. Valuation keeps us sidelined on GPRO despite strong holiday demand we have found thus far."
Alex Gauna, JMP Securities (Market Outperform, $105 PT)
"Our key takeaways from the in-store checks are that there is a healthy velocity of sales volume across the varying price points of the Hero, Hero3+, and Hero4 product offerings, and we observed exceptionally weak activity and poor shelf space positioning from would-be competitive offerings. Online indicators support these observations, with the attractively discounted Hero3+ model at the top of the best-selling imaging list for bestbuy.com, the Hero4 Silver topping the best-sellers at Amazon.com (AMZN) , the entry level Hero, and top of the line Hero4 Black also within the top 10 at amazon.com, with competitive offerings seeing relatively more aggressive sales discounting that implies poor sales volumes. From a media perspective, we note that "GoPro: The Streets of Japan in 4K" has exceeded 4 million views, "GoPro: To Climb an Iceberg in 4K" has topped 3.6 million views, and "GoPro: Wild Mustangs - A Legacy in 4K" is fast approaching 3 million views. Net, we believe GoPro is off to a strong holiday season sales cycle and a strengthening media position that should put it on-track to meet or exceed our F4Q14E non-GAAP EPS of $0.73 (Street $0.69).
We expect the stock to experience a near-term catalyst in the form of Ambarella's (AMBA) earnings results that are expected on Thursday, December 4. Ambarella is a key sub-component supplier to GoPro, and based on the heavy holiday season retail stocking and healthy sales volume of Hero products we observed over the Black Friday weekend, we would expect it to deliver a strong earnings report and guidance."
Michael Pachter, Wedbush Securities (Outperform)
"We believe GoPro was a key Black Friday item, and expect strong sales throughout the holiday selling season. Before any additional discounting on Black Friday, the Hero4 Black model sold very well at Best Buy (BBY) , but we believe Best Buy gave away significant margin with its $20 gift card. Likewise, we expect Walmart (WMT) sold well on the Hero4 Silver and the Hero3 White given its own bundles. With that said, we still expect Amazon to be the predominant market share leader for GoPro throughout the holidays given the convenience of two-day shipping for its Prime members, assuming product availability. During Black Friday week, Amazon intermittently sold out of the newer models, benefiting Best Buy during Black Friday, but Amazon quickly replenished its supply, hardly missing a beat. Best Buy Online was intermittently sold out on Black Friday."
Andrew Uerkwitz, Oppenheimer (Underperform, $45 PT)
"WSJ reported on November 26 that GoPro plans to launch consumer multi-rotor helicopters with HD cameras in late 2015. The company has neither officially confirmed nor declined the report. In our Holiday Guide published last Tuesday, we said we see drones as the hottest topic for 2015. We believe that drones will cultivate multiple high growth markets and a potential drone product can well complement GPRO's cameras. However, we expect no substantial financial impact from a GPRO drone given the highly competitive nature of the market and very specific market positioning (consumer camera drone). In sum, while we like the idea of a GPRO drone product, our bear thesis on GPRO is unchanged. Reiterate Underperform."
-Written by Laurie Kulikowski in New York.