What Happened?
Shares of action camera company GoPro (NASDAQ:GPRO) fell 21.7% in the afternoon session after the company reported disappointing fourth-quarter results, with revenue plunging 32% y/y. The company also missed expectations on both next-quarter revenue and EPS guidance. The downturn was fueled by a 16% drop in camera sell-through as the company recorded a 34% slump in retail channel sales, which made up 74% of total revenue. Despite the sales decline, gross margin ticked up slightly, thanks to lower product costs. However, this wasn't enough to offset the volume decline, leading to a non-GAAP net loss, compared to modest profits a year ago.
Looking ahead, GoPro aims to slash operating expenses by nearly 30% in 2025, while shifting its focus to higher-priced cameras to stabilize margins. Still, with ongoing revenue pressures, the company's outlook remains uncertain.
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What The Market Is Telling Us
GoPro’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. But moves this big are rare even for GoPro and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 9% on the news that it clarified in a press release that it expects its diversified supply chain to soften the blow of U.S. tariffs. As a result, the company doesn't expect the new tariffs to affect its prices in the U.S. or hurt its gross margins for goods shipped to the U.S. Brian McGee, CFO and COO added, "Over the last few years, we proactively moved our U.S.-bound camera production outside of China, which has significantly reduced the impact of tariffs."
GoPro is down 19% since the beginning of the year, and at $0.89 per share, it is trading 69.3% below its 52-week high of $2.90 from February 2024. Investors who bought $1,000 worth of GoPro’s shares 5 years ago would now be looking at an investment worth $221.04.
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