GoPro Inc. (NASDAQ:GPRO) demolished earnings expectations in the fourth quarter on revenues soaring by 75.4% year over year although focus shifted to the resignation of Chief operating officer, Nina Richardson. During an interview on CNBC, Oppenheimer Managing Director, Andrew Uerkwitz, said competition could immensely affect the giant cam maker this year, at the back of concerns that user’s engagement may be slowing down as ASP’s continue to flatten.
The company has already given the clearest of indications that it could struggle this year, seen by a guidance that fell short of Wall Street estimates. GoPro Inc. (NASDAQ:GPRO) introduced a lower-end camera late in the fourth quarter to supplement HERO4 on the high end, something that Uerkwitz believes helped a great deal in improving the company’s gross margins.
“Based on our earlier analysis it looked like the Hero 4 the higher end one was selling very well but it didn’t help lift ASP’S at all. It looks like the lower end one, which has a better gross margin may have added enough to kind of elevate that. Overall it looks like, I would say the mix was a little bit disappointing,” said Mr. Uerkwitz.
Last year’s Christmas season turned out to be the best for GoPro in terms of unit sales, an achievement that Uerkwitz maintains will be extremely hard to replicate this time around. Competition in the electronic space is poised to be stiff with Apple set to release Apple Watch, Ultra HD televisions going for less than $1000 also coming into play at the back of more wearables being unveiled. Developments that are expected to increase competition for consumer’s earnings.
Uerkwitz also believes that many people are unlikely to upgrade to other products that GoPro Inc. (NASDAQ:GPRO) may unveil this year, consequently affecting total unit sales.
“We ultimately think that this is a camera device used to make movies we make a very distinct difference between movie making and video. If you want to do a video use your smartphone. You want to make a movie use your GoPro Inc. (NASDAQ:GPRO), and that is something you will keep four five six seven years out. I don’t see a reason you will upgrade at this point from a features set,” said Mr. Uerkwitz.
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