Production problems with GoPro’s Hero5 camera spook investors
Late-stage production problems with GoPro Inc.’s newest camera caused the company’s shares to falter.
GoPro’s stock fell from $11.94 at the close Thursday to as low as $9.90 in mid-session trading Friday. The shares rebounded a bit to end the day at $11.16, still down 6.5%.
The San Mateo, Calif., action camera maker gave few specific details of the Hero5 camera’s production problems during a Thursday call with analysts, saying only that the problem was found “very late” and that it is now at full production.
“Demand is very strong,” said Anthony Bates, GoPro’s president. “We just can’t catch up to the forecasted demand and that’s what you see reflected.”
The Hero5 updates the company’s core product for the first time since its predecessor’s release in 2014. The waterproof camera, which costs $399, has voice control and ultra-high definition video quality.
Although GoPro is trying to engage its core users — namely outdoor enthusiasts and extreme sport athletes — it is difficult to get them to upgrade every time there is a new product, said Joe Wittine, senior equity research analyst at Longbow Research.
“There’s a worry that what else can they really do beyond this,” he said. “They’re already great products.”
Though some GoPro investors have thought its action cameras were a passing fancy, Hero5’s problems are only on the production side, said Michael Pachter, research analyst at Wedbush Securities.
“If it’s not demand-driven but supply-driven, then I’m willing to give them a pass on the fad argument,” he said.
GoPro’s first drone, the Karma quadcopter that debuted in October, also faced some production issues, but company executives said that was less of an issue than with the Hero5.
GoPro Chief Financial Officer Brian McGee said during the call that the “bulk” of the company’s fourth quarter revenue “is going to be on cameras.”
That means the Karma needs only to be a “relative success,” Wittine said.
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UPDATES:
2:29 p.m.: This article was updated with the closing price for GoPro’s stock.
This article was originally published at 12:20 p.m.
