Spotlight: GoPro Inc.

A new gadget is gaining more popularity lately: The GoPro Cameras, a sportscamera to put on your gear so you can film your field of vision while you sport. Time to shed some light on the stock of its manufacturer GoPro (NASDAQ:GPRO). One year ago the stock price of GoPro noted a mere $31,34. Today the stock sells for $93,70, a rise of almost 200%. However, the stock may have become too expensive and may not reflect its underlying value. GoPro's statements have not yet shown GoPro to be highly profitable. Even the newly introduced product line (Hero4) is unlikely to change this. This product line offers cheaper cameras for consumers, which will increase demand. For the long term however, the higher demand for cheaper cameras may be harmful. The problem is saturation. Once consumers have bought a device like a camera, they will not buy another one or buy additional services because their need is simply satisfied. A similar effect can be seen with TomTom (AMS:TOM2) (navigator systems), which stock price peaks in November 2007 at €64.80, but when they could not keep up their revenue growth rate, because consumers did not need any more navigation systems the stock price fell to the fairly constant level of €6,32. The neutral trend of TomTom shows that this reflects is actually the value of a TomTom stock. This may also be the case for GoPro. In the short run they may show some good results and profit, but once the market is saturated, revenue may fall and the stock price will not be sustainable at this high level. Moreover, as GoPro gains more popularity, competitors will also want to chip in on its success, taking away market share from GoPro. Without new innovations GoPro may well see the same scenario as TomTom. Therefore, GoPro may seem as a fun stock for the short run, but in the long run the stock will come down unless major innovations are done, hence we think GoPro is a StockBash.

Insight: Euro-Dollar Exchange Rate

The Euro-Dollar Exchange Rate has experienced a fall over the last 6 months (1.37 to 1.27). Will this trend continue? We have reason to believe this is indeed the case. The European Central Bank (ECB) is running out of options to stimulate the European economy. Interest rates have never been this low (we even see negative interest rates). Consequently, lending money will cost you money. The ECB is unlikely to lower this interest rate even further in the nearby future and will thus have to look for other ways to stimulate the European economy. The most likely option for the ECB is quantitative easing(QE) (as done by the Federal Reserve in the US). In short, QE central banks create money to purchase government bonds. The laws of supply and demand tells us that this extra supply of Euros will cause the price of one Euro to fall. Moreover, the US Federal Reserve is cutting down on QE, causing the dollar price to go up. Hence, since market experts expect the ECB to issue a QE-plan, and the US cuts down on QE, the Euro-Dollar Exchange Rate is expected to fall even further.

Spotlight: Tata Motors Ltd.

Tata Motors Limited (NYSE: TTM) is India's largest automobile company in terms of revenue and its stock price rose a spectacular 64,26% in the last year. Is there still more to come from Tata Motors? A quick look at the Indian car market tells us yes. The Indian Government invested heavily in the automobile market in India, making passenger vehicles more affordable for the common people. Moreover, disposable income in India has a growth rate of about 10% per year, thus an ongoing increase the purchase of luxury goods is also expected. These factors give India one of the highest growth rates for the car industry in the world. Moreover, Tata Motors also expands in countries such as China, which also experiences a high growth rate in the automobile market.
Besides the favourable automobile market in India and China, Tata Motors also focuses on innovations (e.g. a joint venture with Singapore Airlines), increasing revenues ever more. For these reasons Tata Motors Ltd. is expected sustain its growth rate, therefore we may call Tata Motors a stock smash.