GoPro Inc (NASDAQ:GPRO) is experiencing one of its finest runs in the market thanks to a series of positive news and expected product launches. Action camera sales have been robust as the company continues to enjoy an impressive working relationship with Ambarella Inc (NASDAQ:AMBA). Speaking on CNBC, Pacific Crest research analyst, Brad Erickson, said Ambarella could pose a threat to GoPro’s impressive run.
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GoPro Inc (NASDAQ:GPRO) is not Ambarella’s only customer. The chip-maker supplies a number of companies with chips for making cameras, most of who continue to threaten GoPro’s dominance. It is still unclear whether Ambarella will be able to meet GoPro’s demands in the subsequent quarters as it also strives to supply the needs of the other companies in the space.
“The data point suggests that may be GoPro Inc (NASDAQ:GPRO) is looking at more of an inline September quarter. Ambarella only provides you two-thirds roughly of visibility into the September quarter,” said Mr. Erickson.
GoPro Inc (NASDAQ:GPRO) finds itself in a tough spot heading into the holiday season. Last year, the company registered a 100% growth in revenues awaiting to see how it will fair this time around. The company has announced that it is looking to develop products for VR as well as a Quadcopter. Erickson believes it may be too early for these two new developments to have an impact on the stock.
“The market size for the virtual reality type of product is probably pretty limited. It certainly helps in the Q4 time frame and then obviously talking about the drone in the first half helps as well. But I do think as we look to the holidays they do have a very difficult comp,” said Mr. Erickson.
In the short term, GoPro Inc (NASDAQ:GPRO) will be banking on the success of its Hero 4 camera as well as the recently unveiled mid-range camera Hero+LCD. Erickson expects talk around the company’s drone’s prospects as well as the spherical six-sided camera to act as catalysts heading into the fourth quarter.
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