GoPro Inc (NASDAQ:GPRO)‘s growth story is liked by Wall Street, at least so far. How much of it is real and how much is just throwing big ideas and words out in the air, still remains to be determined. Aswath Damodaran, finance professor at NYU remains to a large extent unconvinced of GoPro Inc (NASDAQ:GPRO)’s valuation, and he spelled out his disbelief on CNBC.
“The way I see it, it’s a company that makes cameras for hyperactive adventurers, and they are quite a few of them out there, but it’s being priced as a social media company in terms of multiples of revenues and the margins that are built into the price, and that’s where I think it falls short, so I think it has promise, but not as much promise as the market thinks it does,” remarked Damodaran.
Damodaran might not be too far off if one looks at how GoPro Inc (NASDAQ:GPRO) is trading today. The stock is down nearly 10% for the day and trading around $75. It still remains to be seen, how far exactly will that dip continue.
When Damodaran was confronted about the role of GoPro Inc (NASDAQ:GPRO) as a media company, given the amount of viewers that the company is attracting, which seemed to be the main focus of the company’s Earnings Call as well, he defended himself pretty well. He said that at this point it is more of a gamble than solid analysis.
“That is the way they present themselves. In fact when I read the annual report I was surprised by how much time they spent on that focus and I think that’s the optionality here. If you are buying for its media opportunities, that is what you are looking for is, how much money can they eventually make from the media opportunities that come out of GoPro Inc (NASDAQ:GPRO). I am not convinced that the revenue opportunities exist yet […],” said Damodaran.
GoPro Inc (NASDAQ:GPRO) might not have the most expensive cameras in the world, but their functionality as hardware has been gathering a lot of traction.
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