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An Update on Gopro

More than two months ago I wrote my first blog post on Gopro’s inability to innovate. I commented on their historically botched launches and how based on their track record I did not believe that they would be able to launch their drone, Karma, on schedule. On May 5, 2016 during their Q1 earnings call, my analysis came to fruition.

During the call CEO Nick Woodman stated, “While we've made great progress on many initiatives, unfortunately, there is one where we won't deliver, the first half of 2016 launch of our drone, Karma.” He continues to state that due to it’s many, “revolutionary features that differentiate it from other drones,” they have to delay launch until the holiday season. The Karma drone has been in the works for nearly a year now and a major red flag besides the delay is that Woodman did not care to name any of the 'revolutionary' features that the drone is going to include. With an already expansive drone market including some well established brands such as DJI, investors understand that for the Karma to sell it must be ahead of the pack from a technology stand-point. Woodman knows this as well, however his inability to list any of these features leads me to believe that the reason he said it was not because the drone truly includes revolutionary features, but in an attempt to appease investors' fears and keep them somewhat optimistic for the time being.

The Karma drone is what many investors were holding out for. The drone was supposed to be a catalyst for revenue and earnings growth. It was a symbol that Gopro is not just a consumer camera maker, but more of a tech company, worthy of its previously astronomical valuation. They have also taken steps to bulk up their innovation team with the recent on-boarding of Daniel Coster, a former member of Apple’s industrial design team. The stock rose an incredible 19% that day showing the market's eagerness to react to any positive sign of innovation within the company. Gopro has since given up those gains and then some as the market was brought back to reality with the news of Karma.

On another note, Gopro’s once modern 360 Degree VR camera rig has already been outpaced by Samsung’s new ‘Gear 360’ camera. They serve the same purposes however Samsung’s is much more compact, lighter and has accompanying software to allow for easy media generation. Below is the GoPro 360 Degree VR camera rig compared to the Samsung Gear 360 rig. The difference in technology is astonishing. The Gopro rig being about the size of a cantaloupe and the Samsung about the size of a tennis ball. 

                                   



In conclusion, Gopro continues to remain far behind the innovation curve and with Nick Woodman leading the company as CEO it seems extremely unlikely that they will ever be able to catch up moving forward. With technology giants like Samsung breathing down their neck, Gopro is outmatched in the fast paced and constantly changing technology market. The stock continues to be an attractive short as their core camera products become ever increasingly commoditized and their once innovative products fall behind.


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