GoPro Inc (NASDAQ:GPRO) rallied in the market contrary to expectations on the expiration of a lock-up period of some of its shares. It was an unusual movement as in most instances, insiders are known to dump their stakes pushing a stock to a downward spiral. CNBC’s, Mellissa Lee, argues that maybe the expiration was already factored in the stock thus the unprecedented rally in the market.
Wedbush Securities analyst Michael Pachter believes the stock could hold its ground on the impressive rally on the fact that GoPro Inc (NASDAQ:GPRO)’s executive are not expected to offload their stakes any time soon.
“[…] I am surprised by the big move today because clearly the market was not flooded with shares but the overhang is there forever until the insiders sell. I don’t think any of the executive is selling nick woodman is selling any time soon but you have a 75 million share overhung forever until they start to clear the market,” said Mr. Pachter.
Pachter believes it is a good strategy by companies to protect the release of shares into the market as one of the ways of protecting the stock’s long-term prospects amid high buy and sell volatility levels. The impressive rally according to Pachter has to do with GoPro Inc (NASDAQ:GPRO) selling more Hero4 cameras at the expense of the low end $129 cameras
It awaits to be seen if GoPro Inc (NASDAQ:GPRO) will be successful in sustaining the strong demand it continues to enjoy on the sale of the HERO4 camera that has better margins especially on the rolling out of the lower end models. The analyst believes that focus should shift to selling the lower end cameras especially to kids, which could translate to massive unit sales.
“I think that demand is going to stay, I think demand for the $129 camera is going to go up so think this guys are going to have another big quarter I think there is a lot of pumped up demand at the lower end. I think GoPro Inc (NASDAQ:GPRO) was kind of overlooking that lower end market,” said Mr. Pachter.
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