GoPro leaps as Wedbush observes multiple growth drivers

GPRO +7.79%Now!

• GoPro (GPRO +7.8%) shares rise after Wedbush upgrades the stock to Outperform from Neutral citing multiple growth opportunities.
• "There are multiple gross margin expansion drivers in place, including GoPro's ongoing shift toward DTC sales domestically, growth of its high-margin subscription service, and a product mix-shift toward high-end hardware," writes analyst Michael Pachter. He believes GoPro's stand-out performance in overcoming supply chain challenges will continue into 2022.
• Pachter notes upcoming catalysts that include the resumption of international travel and GoPro's expansion into "derivative products with specialized use cases to expand its user base" that should incur only minimal R&D and manufacturing costs.
• Of the analysts covering GoPro, 2 hold Buy-equivalent ratings, 3 are Neutral, and 1 is Bearish.

We used to play GPRO and I do still like them.  Their camera tech is fantastic and that's why I like them (high-end professional cameras), not so much the sports and drone markets.  They are up to $1.6Bn these days and finally making profits:  3.3M last Q3, 44.4M last Q4, -10.2M in Q1, 17M in Q2 and $312M in Q3 – so Q3 was pretty good.  Why?  

• GoPro says it generated $166M of free cash flow due largely to continued camera mix shift to the high-end and execution of the company's direct-to-consumer, subscription-centric strategy.

Yes, because of why I liked them!  

Submitted on 2018/08/02 at 3:49 pm

Earnings/Soma – I like GPRO down here as they beat last Q and sold 30M cameras (since 2009) and Jackie bought a knock-off and declared it total crap and then got the Hero and is thrilled with it.  They are pulling in $1Bn and most of their losses have been over R&D misses like drone systems.  They will still lose money, but probably less than 0.25/share and that's pretty good progress.  What I like about GPRO isn't the mass-market cameras but their $50,000 Professional Systems, where they are the king of the market by a wide margin.  

Submitted on 2018/11/19 at 3:50 pm

• GPRO – Let's buy 40 more of the 2021 $5 calls for $1.90 ($7,600) 

Submitted on 2020/03/23 at 10:59 am

$10K/Jeddah – I'd put $400 into 1,000 shares of FTR (0.40 – now 0.26) – just in case!  Another $360 in NAK (0.36 – now 0.51) as you can afford to gamble a bit when you are young.  Then there's F at $4.14 (now $5), X at $5.76 (now $6.36), HOV at $6.85 (now $9.84), CLF at $3.38 (now $3.76), SPWR at $5.93 (now $6.35), IMAX at $10.50 (now $10.09), GPRO at $2.51 (now $2.71), BBBY at $4.70 (now $4.63)… By sticking to things that are cheap, he can afford to buy 10% more whenever he gets $1,000 and all those stocks can double or triple in a recovery and not likely to lose more than 1/2 if they avoid BK, which would make the drip investing more powerful.

Submitted on 2020/04/16 at 11:31 am

GPRO/Lionel – I know we had it in the old LTP but I don't think we've played it in the new portfolios though I know I just told Jeddah I liked them at $2.51 for a small portfolio.   I have no idea what that quote is but, if you are looking at the 2022 $1.50/$4 bull call spread for $1.55 I think I'd rather go for the $2 ($1.30)/4 (0.75) bull call spread at 0.55 as you can buy 3 times more for the same price with the same target and I don't see the point in selling puts – it's just a cheap chance at nearly a triple.  

Submitted on 2020/04/16 at 1:48 pm

GPRO/Potter – That's not the point, the point is that GPRO is a stock we looked at before, they are a solid company that has real sales (no profits) and $2.50 is $400M and they were on track to make over $50M by next year and, while this interrupts their plans – I doubt it permanently derails them so I would buy them at $2.50 and DD at $1.25 and DD again at 0.67 as I think it's a fair gamble down here if other people don't want them.   Even so, I was simply looking at paying 0.55 for a $2 spread that's 0.50 in the money so it pays almost 3:1 if GPRO fails to go BK.   Worth a gamble.

I think we can play GPRO in our Future is Now Portfolio as follows:

• Sell 10 GPRO 2024 $10 puts for $3 ($3,000) 
• Buy 25 GPRO 2024 $7 calls for $6 ($15,000) 
• Sell 25 GPRO 2024 $12 calls for $4 ($10,000) 

That's net $2,000 on the $12,500 spread that's almost entirely in the money to start.  Upside potential is $10,500 (525%) and worst-case is having to own 1,000 shares at net $12, which is just a bit over the current price.  Since that's not a bad-sounding thing, the whole trade is excellent!