GoPro: Innovate or Die

The dismal Q4 report sent the already battered GoPro stock (NASDAQ: GPRO) to a new all time low.  Now down more than 90% since its 2014 highs, the personal camera maker will be forced to change their business model or perish.

It has been reported that the company might come up with software that will enable better/faster sharing of videos on their PC platform, as well as a new drone based camera; hey, there’s even a new CFO coming through the door.  But will this be enough to stir away this company from its path to doom? Yours truly seems to think otherwise:

I’ve never owned a GoPro camera, but when you watch the advertisement videos featuring professional athletes and adrenaline seekers skiing down amazing mountains, doing downhill mountain bike, kayaking, parachuting, etc. you have to admit it looks pretty cool… that is until you try it yourself.  You then realize that you aren’t a professional athlete, and your stunts don’t look so thrilling.  Then it takes you hours to share your video, and you end up sending a string of nature shots, that don’t even feature you to your family and friends who aren’t that much interested in watching it.

That is when your GoPro immediately moves to the bottom of the shelf and starts gathering dust.  If you haven’t had a great experience with your first model, you won’t be easily enticed to purchase a new more powerful version of the camera which would cost more, and still won’t make you a better athlete.

So as it stands now, the market is clearly split into two.  The novelty buyers, who are likely to have purchased one camera, use it a few times, and realize they aren’t making any cool videos; and the professionals.  It is the second group to which this camera is targeted to, and they are GoPro’s main market.  But selling to this group alone doesn’t justify the ridiculous multiples at which this stock has been trading, and hence the massive correction.

Now, the real question to Nick Woodman is: “What are you going to do about it?” The answer to that question will determine the future of this company, its shareholders, and employees.