One-track pony: GoPro tanks due to saturated market, lack of chart-topping AWOLNATION singles
posted Thursday, May 12, 2016 at 2:00 PM EDT
When it rains, it pours for the folks at GoPro, it would seem. The company once known as Woodman Labs is trying to redefine itself as more than just the 800lb gorilla in the action camera market it essentially created, and for good reason -- its stock is tanking.
The action camera market has been very profitable for GoPro for the last decade or so, but now that everybody and their dog -- quite literally -- has an action camera, sales have slowed. And not just that, but GoPro no longer has the game to itself: There's an increasingly strong challenge from a wealth of rivals offered by much larger consumer electronics brands like JVC, LG, Panasonic, Ricoh and Sony. And then there are brands like Garmin and TomTom which are looking to diversify as their own traditional markets dry up, not to mention a raft of me-too products from lesser-known brands, occasionally licensing well-known names like Kodak or Polaroid.
Unfortunately, GoPro's plan to establish itself as something more than just an action camera brand hasn't been going entirely smoothly. In the face of a saturated market, it's had to reevaluate its own product line, slashing all but a handful of its best-selling models. Its efforts to get into the drone market have also faced difficulties, with the Karma aerial photography platform now officially delayed until the holiday season. And the layoffs have already started due to recent weak sales, too, with 7% of GoPro's workforce let go last January.
And now the latest piece of bad news can be found in the company's financials. According to a report from Business Insider, GoPro's first-quarter revenues of US$183.5 million were just about half of what it managed in the same quarter last year.
Not surprisingly, GoPro is trying to put a positive face on things, for example suggesting that the Karma drone delay was actually good news because the product would now benefit from the holiday season -- but every day that goes by is one in which the drone market becomes even more competitive, with prices quickly falling in that market too, and new drones hitting stores on a regular basis. A pivot from action camera to drones may prove to be little more than leap from frying pan to fire; not exactly what GoPro needs.
A look at the company's share price tells you all you need to really need to know. Its stock is worth barely a quarter of that at which it went public less than two years ago, and down almost 90% from its high in October 2014. Clearly, GoPro needs to find a way to turn its luck around if it wants to remain competitive for the long haul.
With tongue rather in cheek, we offer a suggestion to the company. According to Google Trends, it reached its popularity peak at the start of 2015, and despite some spikes since, it has been trending downwards. So, too, has the popularity of electronic rock band AWOLNATION's "Sail", the one track which played in the background of... well, just about every GoPro video ever made, really. (If you wanted to show you were extreme, "Sail" was the soundtrack you chose for your GoPro video, to the point where it became cliche'd and well beyond.)
Perhaps GoPro CEO and one-time billionaire Nick Woodman needs to contact AWOLNATION founder and lead singer Aaron Bruno, and politely request a new chart-topping hit. It could be just the touch of magic GoPro needs, with which to reinvent itself, playing in the background of a generation of Karma drone videos... Or maybe not.
Either way, it seems that Woodman needs to do something to staunch the bleeding, even if it's only to hand the reins over to someone else -- as witnessed by calls from the likes of Motley Fool for him to step down.
(via Business Insider)