GoPro Inc (NASDAQ:GPRO) started off very well post its IPO in June 2014. The stock also hit its all-time high in October 2014 and traded at a whopping $98.47 per share during that time. But the action camera-maker had lost its interest among investors and started the nosedive which ended as low as $37.13 in March 2015. There were many doubts on GoPro Inc (NASDAQ:GPRO)’s ability to increase its shipments as it faced heavy competition from Chinese low cost camera makers. But many investors believed that GoPro Inc (NASDAQ:GPRO) will be able to pull through the rough period and start performing again. As expected by few investors, since its low in March, the GoPro Inc (NASDAQ:GPRO) stock had gained more than 35% of its value. How did this reversal in fortunes happen and what are the catalysts behind this huge move up? Jim Cramer talked on CNBC about his view on GoPro Inc (NASDAQ:GPRO) stock.
One major catalyst behind the revival of GoPro stock might be its first quarter earnings beat that the camera maker had reported towards the end of April. The company posted a EPS of $0.24 beating the expectation of $0.18. GoPro also managed to beat the revenue expectations by $22 million for the first quarter. But the stock did not prop up soon after this earnings beat. The action camera maker also received a lot of upgrades and increased price targets from many firms.
GoPro also announced the acquisition of virtual reality video editing company, Kolor. This acquisition also played as a key catalyst in revival of GoPro stock. Post the earnings beat and acquisition of Kolor, the company received upgrades from many firms. Raymond James upgraded the stock from ‘Market Perform’ to ‘Out Perform’. GoPro also received increased price targets to $63 by Baird and $65 by Dougherty. Very recently Oppenheimer upgraded GoPro stock to ‘Out Perform’ from ‘Under Perform’ rating. All these cluster of upgrades and price revisions played as a key catalyst and catapulted GoPro stock up.
Cramer feels that GoPro has a great ecosystem. He mentioned that many people felt GoPro as a holiday season sales company and expected them to fade away post the holiday season. He said that GoPro could make a comeback even though GoPro is not his favorite name.
Inspite of the upgrades, the firms has advised investors to be cautious about the long-term sustainability since the replacement cycles for GoPro products are much longer. Cramer agrees that the long-term sustainability of the stock cannot be guaranteed considering the nature of the business.
“GoPro does have this great ecosystem. I don’t know about this upgrade. A lot of people were doubtful on GoPro that kind of like it’s a holiday season trade and then over. I think this one can make a comeback and its not my favorite name,” Cramer said.
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