https://seekingalpha.com/article/4247685-gopro-death-mobile-phone

GoPro: Death By Mobile Phone

Branding Advantage
The GoPro brand does have a unique advantage, even as the market continues to saturate, and I believe it will hold up the company's sales decline rate to only a few basis points every year.

The company uses the power of social media better than any other company out there and uses a slew of athletes and activities like the GoPro Mountain Games to promote its products to and in extreme sporting events around the world. They utilize partnerships with leading athletes over Instagram in multiple sporting segments like adventure biking, rock climbing and other action sports. This will keep a core group engaged with their brand and help sales stagnation in the short to medium term. There's no telling what future brand can eclipse GoPro with a similar or more competitive marketing strategy.

Sales And Projections
GoPro increased sales from $1.4 billion to $1.6 billion from 2014 to 2015 but its overall gross margins declined from 45% to 41%. In 2016, the company reported a 27% decline in sales to $1.2 billion and a further decline in gross margins to 39%. In 2017, the company reported only a small $10 million in revenues but gross margins decreased to 32.6%, mostly on account of a higher sales mix from lower-margin products like their Karma drone. In 2018, the company reported a further $30 million decline in revenues and a further decline in gross margins to 31.5%, even as it discontinued its aerial business segment sales and pushed massive expense cuts.

Even as revenues declined, the company kept expenses relatively low and were able to reduce their net loss over that same time period from a $419 million loss in 2016 ($3.10 loss per share) to a $109 million loss in 2018 ($0.78 loss per share).

For 2019, however, the company cost controls are causing analysts to project the company to report EPS of $0.29 and 2020 EPS of $0.31. On the revenues side, the company is projected to report a rise in 2019 revenues to $1.22 billion but a subsequent decline in 2020 to $1.21 billion.

Organic Competitive Threats
Beyond the somewhat inorganic threats posed by the improving smartphone camera industry, the company faces threats for its action cameras specifically dedicated to sporting events and other extreme sports from multiple other companies.

These include mega players in the industry such as Canon (NYSE:CAJ), Nikon (OTCPK:NINOY) and Sony (SNE) as well as specialty companies like Garmin (GRMN), Ricoh (OTCPK:RICOF) and Shenzhen Arashi Vision. The company's 360 technology is facing increasing competitive threats from mobile phones and services from Facebook (FB), which allows its users to make a 360 image using almost any mobile phone through its mobile application.

These competitive threats should continue to pressure the company's organic business and as the market becomes even more saturated with the emergence of new technologies in mobile phones and others, I believe the company will have a hard time overcoming this and producing meaningful sales growth.

Valuation
Even as the company is expected to report a slight growth in EPS for the next 2 years, revenue slowdown and nearly unlimited competitive pressures don't justify a high multiple for the company. GoPro should continue to experience a decline in overall sales even if an occasional bump from a new product release and successful branding can keep the revenue decline to a few basis points every year.

This presents, I believe, an environment where a multiple over 15x EPS is excessive and unrealistic. With 2019 EPS expected at $0.29, a fair value for the year emerges somewhere around $4.35 per share, significantly lower than the current share price of around $6.00 per share.

Conclusion
GoPro once stood as an innovative player in the action camera market. Since, however, the rise and dominance of the mobile phone camera and the ease of use in multiple scenarios, including action sports, has caused sales to stagnate and they now rely on new product releases to boost sales a few basis points just to decline again.

The company still has a foundation of innovative technology and a unique market in the extreme and action sporting segment, not without its own competitive pressures though. It seems unlikely that the company will become insolvent in the near future but current valuation metrics of multiple to earnings don't seem to be justified and underestimate the headwinds the company faces.

In an extremely fragmented and saturated market of cameras, it's rather clear that there's no real investment opportunity unless some marvelous new technology emerges which can change the way we think about photography and videography. Some aspects of IoT in regard to automated tracking and interconnected film production can certainly provide a boost to the industry but the overall market seems to be overestimating growth as more and more simple technologies in mobile phones take over the need for a separate camera for specific purposes beyond the niche market of extreme sports.

I remain neutral on GoPro and believe it's slightly overvalued at current prices.

@Vitaliy_Kiselev

There seems to not be any current speculations on company buyouts?

It's interesting to notice that Canon is going for a big push in the action camera segment now, while you speculate that Canon might be GoPro's buyer...

GoPro 2018 earnings call report conference:

GoPro will expand its hardware and software solutions without going beyond 400 mill operating expenses.

No info on dates for new product launches this year.

Revenue percentage is shifting from Americas to Europe and Asia Pacific regions.

Closing comments from Woodman: "Our brand is in great shape!"

GoPro 2018 earnings report:

Sold units: 4.337 million units (approx the same as in 2017; 4.304 million units).

Comment: Sales numbers are far from the projected 5 million units.

Revenue is up, partially because of the reduced headcount: 891. This is reduced from 1273 headcount one year ago, aka 30 per cent reduction of workforce in one year.

US bound production is moved to Mexico i Q2, 2019.

For 2019 sales are expected to move into more high end cameras. (Black?)

@Vitaliy_Kiselev

As we know that the hardware from Hero6 to Hero7 is basically the same, just some larger RAM and a few smaller auxilary chips replaced it beats me how they was able to shave 100 USD (?) of the production cost.

Exterior of Hero7 Black has a cheaper feel to it no question about that, but can probably only account for a few cents in cost reductions.

A more automated assembly line?

@EspenB

Look at Yi prices, now assume that Yi margin is ala 50%.

GoPro is just extremely inefficient with huge marketing expenses.

https://www.marketwatch.com/story/gopro-ceo-there-was-no-boogeyman-this-holiday-quarter-2019-01-11

"For the first time in years, GoPro Inc. came to CES without a cloud of layoffs, product-line exits or holiday-season woes.

“The boogeyman a lot of people were worried would blow up our fourth quarter didn’t happen,” Chief Executive Nick Woodman told MarketWatch. “No news is good news for GoPro at CES.”

"Woodman declined to comment on the possibility that the company could get acquired, a topic that’s been up for debate in the investment community with the steep decline in GoPro’s share price. He said that the company’s financial performance over its three reported quarters in 2018 as well as its product strategy “put GoPro in a position to succeed as a stand-alone company.”"

"“This year we’re selling at price points where we’re designed to return a profitable margin,” he said, and GoPro is aiming for full-year profitability in 2019. Once the company has achieved “stable growth and profitability” with its current three-camera strategy, it will branch into new products, according to Woodman."

https://www.engadget.com/2019/01/10/gopros-nick-woodman-is-happy-he-gave-away-a-million-dollars/

"​​​​GoPro's Nick Woodman is happy that there's nothing to report. After an eventful few years, 2018 was pretty much back to business as usual."

GoPro CEO has done an impressive number of glossy interviews and media appearances the last week.

Another one:

https://mashable.com/article/nick-woodman-gopro-ceo-talks-hero-7-black-drone-fusion-mashtalk/#cwYLGnGKRPqF

Small talk without any substance.

Is it a "christmas rally"? Will everything crash again in january like it did the last time?

Fusion image quality seems very similar to Insta360 one x, but the one x is smaller, costs less, and the phone app is excellent.

Everything is fine at GoPro.

https://www.theverge.com/2018/12/18/18145385/gopro-ceo-nick-woodman-hero-7-black-compeitition-karma-drone

Current promotions:

Fusion is 100 dollar off.

Hero7 Black is not discounted but rather sold with a "free" charger and extra battery (regular price is like 60 USD).

Hero7 silver is like 100 USD off.

I wonder what will happen to the Fusion next year. Another product to kill off or a new model. While the Fusion seems to get the best reviews for image quality the stitching process (two cards) and user experience seems overshadowed by the competition.

And VR is almost as dead as 3D.

I think that at this point in time they need to develope the GP2 chip for the Hero8. The capabilities of the GP1 chip is exhausted with hypersmooth on the Hero7.

As we know Gopro tried to sell the Hero6 for 500 USD but had to revert back to 400 USD for the Hero7 Black. With various promotions they actually sell for even less.