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Moores Law has a dark side.The acceleration of technology means niche products quickly become commodities. In the case of GoPro Inc(NASDAQ:GPRO), it meant that a cheap, sturdy video camera that could bemounted on a cyclists headbecametoo cheap to remain profitable. <\/p>\n
GoPro CEO and founder Nicholas Woodman saw this coming, but instead of seeking to build a market in other, more expensive cameras that might see waves other than visible light, he decided to mount his commodity cameras on more complex devices, namely drones. <\/p>\n
In doing so,GPRO became a small, high-priced competitor to a company with lower costs, SZ DJI Technology Co.Now, GoProis getting crushed on the one hand by its commodity nature, and on the other hand by a competitor with lower costs and more capital. <\/p>\n
This isnot a good place for GoPro stock to be. <\/p>\n
Analysts saw this coming. The average rating on GoPro stock has been underweight for months, with more screaming sell than buy, even as shares have plunged more than50% since last October. <\/p>\n
GoPro is expected to report another bad quarteron July 26 losses of approximately$50 million, or 35 cents per share, on revenue of $243.59 million. Bullswill note that represents 10% growth over last year, and fewer losses, but the problems here are more fundamental. <\/p>\n
Most InvestorPlace writers are telling readers to go away. James Brumley recently called the stock a one hit wonder.Tom Taulli said the creative magic is long gone.Ryan Fuhrman called it a real buzz kill. <\/p>\n
Only Richard Saintvilus sees any hope, mainly in the companys software. The drone market is growing rapidly, and content sharing through GPROsoftware holds promise. With a market cap now lower than its annual sales, albeitsolid sales, he holds out for hopeof a second-half rebound. <\/p>\n
Most of the opportunity in the drone market lies in heavy commercial and military drones, the kind that can drop packages and bombs, rather thanin the lightweight, consumer, camera-focused drones that GoPro makes. <\/p>\n
But, that does bring up a promising path forward, shouldGoPro choose to take it. I dont buy stocks based on an assumption that management will change course, but if GPROdid shift its focus, stockholders would benefit. <\/p>\n
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GoPro Inc (GPRO): The Dark Side of Moore's Law - Investorplace.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Popular Posts: Recent Posts: Moores Law has a dark side.The acceleration of technology means niche products quickly become commodities. In the case of GoPro Inc(NASDAQ:GPRO), it meant that a cheap, sturdy video camera that could bemounted on a cyclists headbecametoo cheap to remain profitable. GoPro CEO and founder Nicholas Woodman saw this coming, but instead of seeking to build a market in other, more expensive cameras that might see waves other than visible light, he decided to mount his commodity cameras on more complex devices, namely drones. Continue reading