Demand for GoPro products has peaked at Australian retailers, once a hot seller that deliver what one retailer described as a “bucket load” of margin the humble adventure camera is now facing new competition as shares in the Company go the same way as sales.
Citi analyst Jeremy David has slashes his GoPro price target from $75 down to $22.
Shares in GoPro are down 80% from its peak in October 2014.
This weekend the Company launched a teaser video for its long awaited quadcopter drone product which is tipped to be one of its star products at CES.
The GoPro camera drone is set for release next year; it will be called Karma.
The teaser video released by GoPro this weekend doesn’t give much away and where GoPro was a leader in the adventure camera category the Karma drone will face stiff competition from the likes of Solo 3DR and the DJI Phantom 2 Vision PLUS Quadcopter which are proving very popular in the specialist camera and action sports shops.
The tease campaign for the GoPro drone photo shows a drone hovering by a skier as he makes his way down mountainside at resort at Revelstoke, B.C., Canada. Some US ski resorts are exploring the possibility of “drone zones” where professionally operated drones can produce customized video that show off individual’s skiers in action.
Some analysts claim that GoPro could face a tough future and that the lack of patents, (GoPro only owns 56 patents) makes the Company less attractive to investors.
Citi analyst Jeremy David claims this is enough to warrant a purchase for technology reasons. In other words, a company like Apple has plenty of technology expertise to build its own action camera without needing to buy GoPro to do it.
There is also concern that the drone product won’t be able to stem the “softening” demand for GoPro products-including the new HERO4 Session.
“While we initially thought GoPro would recover from the poor HERO4 Session sell thru (initially attributed to poor marketing/ launch timing), we are becoming worried that the poor sell thru could be a reflection of diminishing consumer interest in new GoPro devices/ features that GoPro is introducing,” David writes.
“We note that the Session is a perfectly good product, and is the favourite GoPro device of the CEO and the CFO, so its lack of momentum in the marketplace at a $300 price point is a bit of a head scratcher.”
GoPro shares traded down 3% in Friday morning trading to just over $18 per share.
