2 Reasons GoPro Might Be Worth Investing In for the Long Haul

Before you go, we thought you'd like these...
Before you go close icon

GoPro is preparing for what looks to be a sky-high IPO, but is the business sustainable? Credits: Matjaz Klemencic, GoPro.

Should Fools buy into GoPro when the stock debuts on the public markets this coming week? Guest host Alison Southwick put these questions to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up On Wall Street, The Motley Fool's web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Tim says that while most signs point to a blockbuster opening, the business may not be faring as well some investors might like. Gross margins are falling and revenue growth is slowing as key supplier Ambarella is actively diversifying its business.

"While we will continue to expand our end market exposure, such as to non-sports wearable cameras, we anticipate that sales to a limited number of end markets will continue to account for a significant percentage of our total revenue for the foreseeable future," Ambarella said in its most recent quarterly filing with the Securities and Exchange Commission (SEC).

Nathan agrees, noting that it's rarely smart to buy a new issue in a hot IPO market. GoPro also faces just as many threats as opportunities. Still, there are two indicators that the stock may be worth buying for the long-term. First, CEO and founder Nick Woodman has arranged for 1.5% of the company's stock to be sold directly to fans via the social IPO platform LOYAL3. Engaged owners who genuinely care about their customers tend to perform better for shareholders over the long haul.

Just as importantly, Woodman and his team appear to be investing proceeds back into the business in order to prepare for new competition and diversify GoPro's revenue stream. That's also a good sign, Nathan says, even if we can't be sure that the company's efforts will pay off.

Now it's your turn to weigh in using the comments box below. Do you plan to invest in the GoPro IPO? Click the video to watch Alison put Nathan and Tim on the spot, and then be sure to follow us on Twitter for more segments and regular geek news updates!

How to find an invest in the next great growth story -- before the rest of the market does
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hyper-growth markets. Want to learn how? Our new special report reveals the process for investing in early stage disruptors while introducing you to one stock that's making Apple's next breakthrough device possible. For the full story and a peek at this recently unclassified iCandy, click here now.

The article 2 Reasons GoPro Might Be Worth Investing In for the Long Haul originally appeared on Fool.com.

Alison Southwick has no position in any stocks mentioned. Nathan Alderman and Tim Beyers own shares of Apple. The Motley Fool recommends Ambarella and Apple. The Motley Fool owns shares of Ambarella and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading