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.