Why GoPro Stock Plunged 17.7% This Week
GoPro's (NASDAQ: GPRO) turnaround isn't taking hold, and the company has once again seen its stock drop like a rock this week. According to data provided by S&P Global Market Intelligence, shares fell as much as 17.7% during the week and are down 16.7% at 3 p.m. ET on Friday.
From bad to worse
GoPro announced first-quarter earnings this week, and there wasn't a lot to like. Revenue fell 11% from a year ago to $155 million, generally accepted accounting principles (GAAP) loss exploded to $339 million, and non-GAAP loss was up $7 million to $32 million, or $0.21 per share.
Q1 isn't usually a great quarter for GoPro, but the company burned through $98.4 million in cash and ended the year with just $133.7 million in cash on the balance sheet.
No turnaround ahead
The problem for GoPro in general is demand for products is waning, and the company can't seem to make a profit outside of the rare strong holiday quarter. And the subscription business isn't big enough to maintain profitability.
I think the bigger problem is the falling stock price, which makes it harder to raise either debt or equity financing that GoPro will likely need as early as this year.
What investors have to hope for is a huge holiday quarter, which may be asking too much for a company that's only making incremental changes to its products. And with that dynamic in place, this is a discount I'm going to avoid until GoPro shows it has true staying power.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
