Wearable Camera Maker Issues First Quarterly Report After Its Hot IPO
GoPro Inc., GPRO +3.57% in its first earnings report after a hot initial public offering in June, reported better-than-expected second-quarter results but still saw some of the air come out of its highflying stock.
The San Mateo, Calf.-based company makes a wearable high-definition video recorder that first appealed to surfers and cyclists. It is now the top-selling camcorder in the world by volume, according to market researcher IDC.
A big question for GoPro is whether it can keep selling $200 to $400 video cameras when there is little to stop rivals from imitating the hardware at lower prices. As smartphones improve their video capabilities, consumers have fewer reasons to buy dedicated cameras.
At the end of June, GoPro's IPO priced at $24, at the high end of a projected range of $21 to $24. The shares rose 31% on their first trading day and have since doubled.
Thursday, following the company's earnings report, shares fell 11% in after-hours trading to $42.60 despite better-than-expected results.
For the second quarter, GoPro said its earnings excluding certain costs were $11.8 million, or 8 cents a share, compared with the year-ago loss before items of $3.2 million, or 3 cents a share, a year earlier.
Revenue rose 38% to $244.6 million.
Analysts polled by Thomson Reuters had projected earnings of 6 cents a share on revenue of $238 million.
GoPro said the strong quarter reflected higher demand for its Hero 3+ Black Edition and for accessory products. The company said the popularity of its YouTube videos is "fueling our virtuous cycle whereby viewership of GoPro content drives sales."
To stay ahead of potential rivals, GoPro has been trying to make money from the videos generated by the company and by millions of users. GoPro started a TV-like channel on Microsoft Corp.'s Xbox videogame console and has a channel on in-flight entertainment systems for Virgin America Inc. that features sky diving and other adventurous activities.
Including all items, GoPro reported a bottom-line loss of $19.8 million, or 24 cents a share, compared with a loss of $5.1 million, or 6 cents a share, a year earlier.
Total operating expenses increased to $119.5 million from $62.8 million.
Several analysts began coverage of GoPro with the equivalent of a "hold" rating. Barclays analyst Joseph Wolf wrote "we can think of few products that so perfectly capture the era of the 'selfie' and the 'digital native' as the GoPro," but he believes there is "limited upside" for the stock.
I suspect that Walmart, BestBuy, etc. will have some fantastic deal on the basic Hero to get people in their stores on Black Friday. I bet they sell it for $100. Instead of some cheap GPS device, they will have the Hero. GoPro will then say "look at how many of these things we sold."
GoPro Is Crashing After Founders Find A Way Around The Lock-Up Restriction
GoPro is breaking its lock-up restriction.
On Wednesday, GoPro announced that founders Nick and Jill Woodman would gift about 5.8 million shares from their personal stake in the company to the Nicholas + Jill Woodman Foundation.
Under an agreement with JPMorgan, the Woodmans will be released from the lock-up restriction that prevents company insiders from selling shares within a certain timeframe after a company's public debut, typically about 180 days. In other words, these shares wouldn't have been allowed until some time in 2015.
GoPro shares have been on an absolute tear, up 177% since its IPO. In early trading on Thursday, shares of GoPro were down more than 4%.
Here's the full release from GoPro:
SAN MATEO, Calif., Oct 1, 2014 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO), enabler of some of today's most immersive and engaging content, today announced that GoPro's husband and wife founders, Nicholas and Jill Woodman, have provided a personal gift towards establishing a new charitable organization, The Jill + Nicholas Woodman Foundation. J.P. Morgan Securities LLC, the lead book-running managers of the Company's June 2014 public sale of 20,470,000 shares of Class A common stock, has agreed to release the charitable organization from a lock-up restriction, effective October 3, 2014, with respect to the 5,821,739 shares of the Company's Class A common stock gifted to it. Nicholas Woodman, an officer of the Company, and Jill Woodman personally contributed the aforementioned shares from their own holdings toward the foundation.
"We wake up every morning grateful for the opportunities life has given us," Nicholas and Jill expressed in a joint statement. "We hope to return the favor as best we can."
More information on the Jill + Nicholas Woodman Foundation will be released at a later date.
Shares of GoPro Inc. GPRO, -8.86% skidded on Friday after analysts at Oppenheimer initiated coverage of the stock with a sell rating and a price target of $45. Oppenheimer's Andrew Uerkwitz noted that although GoPro is a powerful brand, it will face challenges as it expands into a broader market, including competing with smartphones. "While we believe this will prove difficult, we also expect several new entrants to the capture market that will result in lost wallet share or lower gross margins, and ultimately missed expectations," said Uerkwitz in a report. GoPro shares fell 9.6% to $71.51.
GoPro Prices Secondary Offering at Huge Discount: Opportunity and Risk
GoPro Inc. (NASDAQ: GPRO) announced last week that it will have a secondary offering of up to $800 million in stock. A new filing indicates that the offering will be about 10.4 million shares, and the company has released the pricing for the offering as $75 per share. At the $75 pricing, the total filing is worth about $777 million.
At the end of September, a total of 99.76 million class B shares and 26.29 million class A shares were outstanding. The largest shareholder is the Woodman Family Trust, which is directed by GoPro’s founder and CEO, Nicholas Woodman, and by Jill R. Woodman. The trust owns 45 million class B shares, which are identical in value to class A shares, but each class B share gets 10 votes.
Nicholas and Jill Woodman will sell about 4.1 million shares from trust. The Silicon Valley Community Foundation is not selling shares. This may cause confusion, given the reports from over a month ago that the Woodman sales would not take place until next year, because the Silicon Valley Community Foundation has said it will not sell shares until 2015. Other major selling shareholders in this offering are Riverwood Capital, offering 1.63 million shares, and Foxteq Holdings, offering a million shares.
There are a couple of ways to think about this. Some investors will think this was too large a discount and that insiders are just getting even richer. The other side is that investors who missed the GoPro bandwagon may feel that this gives them an opportunity to buy on a serious pullback — after all, GoPro stock has now lost almost a quarter of its value from the peak, and its stock price was down $10 in just two trading sessions.
The stock has a consensus analyst price target of $81.60 and a post-IPO trading range of $28.65 to 98.47. The market cap is nearly $10 billion.
Here is GoPro’s Use of Proceeds from the filing, and it is unusually long:
We estimate that we will receive net proceeds of $97.1 million from the sale of the 1,287,533 shares of Class A common stock that we are selling in this offering, assuming a public offering price of $79.15 per share. … We will also receive proceeds of $2.3 million from the exercise of stock options by certain selling stockholders in connection with this offering. We will not receive any proceeds from the sale of shares of our Class A common stock by the selling stockholders.
The principal purposes of this offering are to raise additional capital, facilitate an orderly distribution of shares for the selling stockholders in this offering and increase our public float. We expect to use the net proceeds of this offering for general corporate purposes including working capital. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, technologies or assets. However, we have no present commitments or agreements to enter into any acquisitions or make any investments.
Our management will have significant flexibility in applying the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these net proceeds.
Pending the uses described above, we intend to invest the net proceeds from this offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. The goal with respect to the investment of these net proceeds will be capital preservation and liquidity so that these funds are readily available to fund our operations.
GoPro rises, even with CEO’s plan to cash in shares
A filing with the U.S. Securities and Exchange Commission said late Monday that GoPro will offer almost 12 million shares in a coming secondary offering. Of that total, Chief Executive Nick Woodman plans to sell 4.1 million shares of his own, via his Woodman Family Trust. Other GoPro shareholders getting in on the selling game include Riverwood Captial, Foxteq Holdings and GoPro itself, which will sell 1.3 million shares. Altogether, the secondary offering will be worth almost $970 million, based on GoPro’s Monday closing price of $81.50.
Under normal circumstances, when a CEO files to sell a $334 million stake in his company, the reaction of the marketplace is that it must be time to get out. But nothing about GoPro is normal, as evidenced by the company’s shares rising more than 5% Tuesday, to $85.57.
Sean Naughton, of Piper Jaffray, said that “it is a little bit of a head scratcher” as to why GoPro’s shares would get such a lift even though Woodman and others are planning on selling some of their holdings. But Naughton said that since the offering includes secondary shares there “should be no real change in value on the stock.”
- Reported EPS of $0.99 ($122.3 million) vs $0.70 estimate.
- Revenues came in at $633.9 million vs $581.9 million. Quarterly revenue up 75% year over year.
- Margins were 48% vs 43.5% to 44.5% expected
- FY2014 revenue of $1.39 billion, up 41% vs FY2013
- unit shipments rose 34% to 2.4 million. Expectations were for 2 million.
after hours trading halted.
If this forces shorts to cover, watch it pop to $60+.