GoPro, GPRO, Shares Crushed On Earnings Disappointment, Revenue Still Up 43 Percent

Shares of GoPro, Inc. (NASDAQ: GPRO) were crushed, trading down $5.25 or 17.41 percent, in the NASDAQ after-hours market yesterday, on third quarter 2015 financial results that appear to have disappointed investors.

The Wall Street analyst consensus estimate for GPRO shares was for EPS of $0.29. GoPro was only able to deliver $0.25, a 13.8 percent miss. Further, GoPro reported gross revenue of $400 million. The consensus had been for revenue of $433.6 million.

The after-hours NASDAQ trading took GPRO shares below their previous 52-week, and all-time, low of $26.68. Volume for both the regular and after-hours trading sessions was more than double average trading volume.

Even though Wall Street appears to be disappointed with GoPro, the EPS number is up 92.3 percent year-over-year and sales are up 43.0 percent year-over-year. GoPro just isn’t growing as fast as the street was hoping.

GoPro also announced that 27,000 people had submitted entries in the first week of the GoPro Awards, a contest that offers cash prizes for user-submitted photos and videos taken with GoPro equipment.

The consensus is for GPRO EPS to fall 17.2 percent year-over-year in the fourth quarter of 2015, but to still grow by 28.0 percent for all of 2015. GPRO EPS is expected to grow 14.8 percent next year and grow at an average of 31.9 percent annually over the coming five years.

Full-year 2015 sales of $1.9 billion, up 36 percent year-over-year, are expected to grow 18.9 percent to $2.26 billion in 2016.

Over the past 90 days, the consensus view for 2015 GPRO EPS has come down from $1.75 to $1.69. 2016 views have also been taken down from $2.12 to $1.94, or 8.5 percent.

GoPro carries zero debt and has a super-healthy return on equity of 41.6 percent. The company also has a profit margin of 11.1 percent and an operating margin of 15.1 percent.

FMR, LLC. and BlackRock Institutional Trust Company are two major holders of GPRO shares. Fifteen research firms publish GPRO stock price targets; going into the report the average target was $56 and targets ranged from $25 to $105. Share price targets may be revised after yesterday’s financial results.

GoPro first issued shares for $24 in a $427.2 million deal in June of 2014. Shares quickly vaulted to $40, and then $60, before finally topping at $98.47 on October 7, 2014. Since that day, with some minor rallies, the stock has gone nowhere but down. After-hours NASDAQ trading brought GPRO shares close to their actual offering price. A price they have never traded at in the open market before.

Unlike some recent offerings, such as Shopify (NYSE: SHOP), as reported by the Inquisitr, GoPro actually had profits to go along with its growth when it went public. It turns out that GoPro may not continue to grow as fast as some people were expecting, and the stock market is a growth game. However, GoPro is a well-run, profitable business, with a hugely supportive user-base. It is doubtful that, even with the stock sell-off, the company is going anywhere anytime soon.

Part of the market’s reaction may be that GoPro may have developed a reputation for beating estimates. For whatever reason, for the third quarter of 2015, GoPro management just wasn’t able to live up to the street’s expectations. Over the past four quarterly reports, leading up to yesterday’s, GoPro had beat GPRO EPS estimates by 50.0, 41.4, 33.3, and 34.6 percent. To suddenly miss by $0.04 seems to have thoroughly disappointed investors.

Part of GoPro’s appeal was its breakthrough nature in terms of the weight and size reductions it provided, allowing a whole new realm in photography to be opened. While GoPro’s equipment is still seen as top-of-the-line, competiors such as the Contour, the HTC Re, and many others will continue to offer consumers alternatives and erode some GoPro support.

GoPros’s move to offer awards for user-contributed media could prove successful. However, to this point anyways, it does not appear to be successful enough to satisfy the expectations of stockholders.

[Feature Screenshot Via GoPro/YouTube]