GoPro (GPRO), the American manufacturer of action cameras, is currently trading at around $6 per share. With such a share value, it would be surprising to know that the company actually began public trading at $24 in 2014. It saw a rise up to $90 per share thereafter for the next few months. Even though the company had developed its own market, there was soon tough competition within.
The core products were copied in a blink and made available at lower costs. Further, the updated technologies like smartphones with better camera quality created quite a challenge for the company. GoPro soon introduced virtual-reality and a 360-degree camera in order to overcome threats faced.
Recovery Of The Two Companies Attracting Investment
Similar has been the story of Fitbit (FIT). It was the first ever provider of fitness tracker wireless technology devices. Fitbit was initially traded at $20 per share after going public in 2015. It saw a surge in share prices of up to $40 per share over the following months. Then FIT stock price plunged, currently being around $4 per share. Full-featured smart watches took away the company’s unique proposition. In order to deal with the decline, Fitbit sold fancier trackers and smartwatches.
This year in Q1, things for GoPro seemed to take a turn for better with 20% increase in revenue annually. The year prior, revenue had fallen by 3% following a 27% decrease in 2016 and flat growth in 2017. The Q1 revenue growth was a result of various variables. These variables are:
- HERO7 Black camera which brings in 90% of the company’s total sales. It saw an increase in demand,
- The U.S. action camera market expanded market share
- Higher average selling prices
All these variables resulted in a subscription growth of over 50% annually.
The adjusted gross margin of the company saw a surge of over 10 % to 34.2% annually along with lowered operating costs of 16%. The net loss that stood at $47.4 million prior to these adjustments came down to $10.2 million. These project earnings of $0.25-$0.45 per share (as opposed to a loss of $0.23 per share in 2018) from its revenue increment by 7%-10%.
What’s The Future Hold For The Stocks’ Prices
Things are looking up for GoPro as it further expects better recovery being supported by increased camera shipments and stable prices. Instead of venturing and expanding into other markets, the company now focuses on its core business, locking in customers through GoPro Plus.
Fitbit still, has a lot of battles to win ahead. The rate of revenue fall has been improving – from 26% fall in 2017 to 6% fall in 2018 and then 10% rise in revenue in 2019. But the company still faces tough competition in the market as implied by the company’s falling average selling prices.
The revenue rise could be credited to larger shipments of various devices – Charge 3, Inspire, Inspire HR and Versa Lite- that contributed to two-thirds of the total sales of the company.
Fitbit is hopeful of revenue rise to 1%-4% annually, in spite of the falling ASP. As projected by the company it would continue its downward trend. Fitbit is focusing on increasing the customer base. They’ll provide devices at a cheaper rate as compared to Apple and Xiaomi in order to take back its spot in the market from such rivals.
The company projects an adjusted gross profit margin of 40%, expecting its Fitbit Health Solutions software services to gain more popularity in the market. The loss per share is expected to come down to $0.15 per share as opposed to 2018’s loss of $0.76 per share, as calculated by analysts.
If the two stocks – GoPro and Fitbit- were to be compared, GoPro could come out as a better investment opportunity. GoPro is ahead in the recovery battle with fewer competitive companies while Fitbit has giants like Apple and Xiaomi to fight off to stay in the market.
