GoPro, Inc. (GPRO)

[eastunder]

3 Stocks to Avoid This Week

Rick Munarriz
(TMFBreakerRick)

Jul 19, 2020 at 8:00AM

https://www.fool.com/investing/2020/03/19/3-tech-stocks-to-avoid-in-2020.aspx

1. GoPro: Sluggish top-line growth

Shares of action camera manufacturer GoPro Inc. (NASDAQ:GPRO) have burned considerable investor wealth in recent years. The company went public in June 2014 at a price of $24 per share. The stock then zoomed to $90 in October 2014 before wiping off billions of dollars to currently trade at around $2.60 per share.

This means GoPro stock is trading 89% below its IPO price and 97% below its all-time high. The company has been hurt by slowing sales, failed product launches, and mounting losses, which have driven the stock to an all-time low.

GoPro's sales fell from $1.18 billion in 2017 to $1.14 billion in 2018. Sales then rose marginally to $1.19 billion in 2019 and are expected by analysts to fall to $1.17 billion in 2020. However, with the COVID-19 pandemic weighing heavily on consumer demand, these figures may be revised lower in the upcoming quarterly call.

GoPro has built a strong brand and manufactures high-quality products. NPD Group estimates the company has a 93% dollar share in the action camera category in the United States. However, the company's products do not warrant repeat purchases and are viewed as premium products in emerging markets.

GoPro has introduced several cameras across various price points, but this strategy has not translated to top-line growth. The ever-improving specifications of the typical smartphone have made action cameras irrelevant to the average buyer.

GoPro stock is valued at just over $400 million, down from its all-time high market cap of $14 billion. The stock's forward-price-to-sales ratio of 0.45 might look tempting for contrarian investors, but the company's sluggish top-line growth might be a huge negative to any recovery in its stock price.