GoPro management is scheduled to give a big presentation at the Consumer Electronics Show (CES) tomorrow, and Wall Street is anxiously waiting to hear what they have to say. Last week JPMorgan analyst Paul Coster said he thinks GoPro shares are a Buy heading into CES 2015.
But of course not every firm is so bullish on the company.
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Citron reiterates prediction about GoPro
Analysts at Citron Research blasted the action camera maker in November, predicting that its shares will plummet to $30 within the next 12 months. Today on Twitter, they reminded Wall Street of their prediction, adding that it didn’t appear like any of GoPro’s cameras are sold out anywhere, including on Amazon.
They compared the company to 3D printer manufacturer 3D Systems, saying they expect GoPro stock to pop before plummeting at some point after CES.
HNY to all. $GPRO not sold out anywhere, incl. AMZN. This is $DDD of this year. CES than kerplunk $30 by DEC (and that is generous).
— Citron Research (@CitronResearch) January 5, 2015
GoPro going into CES 2015
CES begins tomorrow, and technology gurus have high expectations for GoPro’s booth at the convention. As Coster’s recent research note highlighted, Wall Street may have high expectations for GoPro at CES as well, if last week’s rise in the company’s share price is any indication.
However, there was no clear reason for that increase, and some have suggested that a short squeeze may have been the real reason, particularly because it came around the same time as the expiration on a lockup of insider-owned shares.
GoPro continues to trade at a very high forward price to earnings multiple of about 56 times. It will take quite a lot for Wall Street to remain convinced that the company’s stock is worth so much.
An unintended consequence of CES?
So while bulls see CES as a possible upward catalyst for GoPro, there’s also the possibility that it will drag the company’s shares lower. The company unveiled its newest cameras just in time for the holiday shopping season, so it seems unlikely management will have much in the way of new products to show off.
Instead, it seems more likely that competitors will be able to swoop in and present new cameras that will pose a more serious threat to GoPro’s share of the action camera market than what are currently available. After all, CES is one of the biggest electronics conventions in the world, so it offers the perfect platform for competitors to show off cameras that seriously threaten GoPro. Also one reason some analysts are bearish on GoPro is because of the threat from rising competition in the action camera market.
One competitor that may indeed pose a problem is Giroptic. Investor’s Business Daily highlights the company’s new 360cam, which uses three cameras and three microphones to capture all angles of action videos. The camera certainly seems to take what GoPro has done and take it yet another step further, although Giroptic currently lacks the brand power GoPro has established for itself. It will be interesting to see if GoPro has any interest in gobbling up companies like Giroptic, as it could certainly benefit from the French startup’s technology.
As of this writing, shares of GoPro were relatively flat.