GoPro stock jumps on news company is seeking a sale

Javier Howell
January 9, 2018

GoPro announced Monday it will cut more than 20 percent of its staff and signaled it was willing to consider a sale following weak holiday-season sales.

"A hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead".

Before U.S. stock markets opened, GoPro said the job cuts would leave the company with less than 1,000 workers, down from its current level of 1,254 employees.

While GoPro's stock came under serious pressure on Monday, there was one clear victor in its investor base: traders betting against the company.

Michael Pachter, of Wedbush Securities, said GoPro became a victim of both hubris and desperation as it tried to make a go of it in the drone sector. Only a few weeks after its release, GoPro issued a mass recall of 2,500 units because faulty engineering caused the drones to lose power mid-flight and drop out of the sky. Karma has faced margin challenges in and extremely competitive market. It had entered a partnership with DJI, according to Tech Crunch, before DJI backed out, leaving GoPro to develop the Karma drone on its own. "Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier", reads GoPro's press release.

Morgan Stanley said in a research note earlier Monday that the price cut for the Hero6 camera would make earnings growth hard in fiscal 2018.

"If there are opportunities for us to scale awareness of GoPro globally by being part of a bigger company, that's something that we would entertain", CEO Nick Woodman told CNBC Monday morning.

He hoped the actions would return the firm to profitability in the second half of 2018. The company said it expects revenue of about $340 million for the fourth quarter after projecting $470 million for the quarter in November.

Other reports by Insurance News

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