GoPro stock plunges after poor earnings report
GoPro stock dropped sharply after the camera company said it expected a sharp decline in fourth-quarter revenue, saying demand for its cameras was weak over the holiday season.
The disappointing outlook sent shares of GoPro (GPRO) plummeting nearly 30 percent to an all-time low of $5.32 Monday morning. The company, which went public at $24 a share in June 2014, has hired an investment bank to help it explore strategic alternatives, including a possible sale, CNBC reported.
That news underscored GoPro's swift descent from tech darling to struggling hardware maker. The company was profitable and valued at about $3 billion at the time of its ballyhooed initial public offering, driven by popularity among extreme sports aficionados. It didn't hurt that the camera was the tool of choice for many a firefighter rescuing an imperiled animal.
As consumers were slow to pick up GoPro's products, however, investors soured on the stock. GoPro had to drop prices on its drones in 2016 after initial disappointing sales. It repeated that process with the HERO5, its latest gadget, dropping the price by one-third, to below $300, at the start of December.
"Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier," said CEO Nicholas Woodman.
This year the camera maker expects $340 million in revenue, it said, marking a 37 percent drop from a year ago and falling far short of Wall Street estimates for $472 million, according to an analyst survey by FactSet.
The San Mateo, California, company also plans to stop making aerial drones, it said, citing tough competition and a "hostile regulatory environment in Europe and the United States."
The company is cutting its workforce by more than 20 percent, to fewer than 1,000 employees. As part of the restructuring plan, Woodman will also cut his 2018 cash compensation to $1. It was $800,000 in 2016.
