Goldman Sachs Devalued GoPro’s Share Price

Despite the efforts of the company to revigorate its sales for 2017, Goldman Sachs lowered its share price as a sign that GoPro will face a difficult 2017 as well.

GoPro branded itself as the main supply of digital goodies for adrenaline lovers. The market was craving for a long time a special camera that was capable enough of becoming the best friend of a daredevil. Thus, GoPro filled this void with their own products that can withstand major shocks, wet environment, and many others corrosive factors. On February 7, 2014, the company filed the initial public offering for which investors honored the share price at $24. Despite all these achievements, Goldman Sachs lowered the shares of the company to an all-time low.

On Monday, Simona Jankowski, an analyst at Goldman Sachs, decreased her rating for GoPro and set the price target to a record low. While the company was struggling with a share price of $9.50, the organization has now to deal with $6 per share. As a consequence, investors couldn’t disregard these results and sent shares of $7.95 during the trading session on Monday. The day ended with a loss of 8%, as the transactions improved a little bit to $8.14 throughout the day.

Jankowski didn’t expect a revived sales evolution for the company even in the future. The main agent that brought such a low devaluation for GoPro was precisely last holiday season. Instead of having impressive revenue numbers, the company remained with plenty products in its inventory after the end of winter.

Jankowski noticed that the attempts to resuscitate sales by focusing on operating expenses were never a good strategy for GoPro. For instance, in 2016 the revenue was of $1.19 billion which fell by 27% from the previous year. On the other hand, the same year the operating expenses were twice higher than 2014, from $709 million to $369 million.

The company announced a restructuring plan for this year. By the end of 2017, GoPro projects to spend only up to $600 million. Moreover, it will close its entertainment business and eliminate 15% of job positions. However, Jankowski didn’t agree with these changes. By focusing its success rate on one branch only, the company has higher chances of failure if this market isn’t compliant anymore.

As for the product diversification, the tech company wasn’t successful. As it tried to leave cameras behind, GoPro embraced the innovative idea of drones through its new product, Karma. Beside several failures such as delays and a major recall, Karma is too weak to make it in the market. Its rival DJI encompasses the GoPro drone with its Mavic in all domains like speed, price, weights, size, and distance.

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