When GoPro Inc (NASDAQ:GPRO) was first floated on the NASDAQ Composite in June in the heat of the summer IPO frenzy at $24 no-one could have predicted the surge we’ve seen in the share price since then.
This surge in the share price has prompted a number of sceptical voices to suggest that it may well now be significantly overvalued.
Only this month the shares were trading just shy of $100 making its CEO Nick Woodman a billionaire in the process, prompting some commentators to ask first and foremost whether the company is a hardware company or a social media company.
Revenue is set to blow past $1bn in this year alone as the company’s wearable mini cameras go down a storm with consumers, who want to document their activities without consciously having to record them.
They then post the results immediately on social media, by way of the GoPro app and software.
Based on current valuations the company is now valued at $10bn and given recent gains there are some concerns that the current up move may be overextended.
Looking at the fundamentals the company is making money and lots of it, but when compared to similar companies who produce small cameras the margins are impressive, which would appear to suggest that in the long term they could be difficult to sustain, as copycat brands start to eat into market share.
We’ve already seen Htc Corp (TW:2498) start to move into this space with the launch of their own action camera which is both waterproof and works with a wide angle option, though some of the reviews haven’t been great.
The cameras are undoubtedly impressive with the HERO4 starting at £380, and it is this product launch that has prompted the share price take-off, but it is going to have to shift a lot of product to justify the current valuation and will have to keep doing so for the shares to keep on going higher.
The company was turning over $200m in revenue in 2011 and 3 years later it is now over the $1bn mark.
The company’s motto is “Be a Hero”, which is probably quite apt as any buyers of the shares at these levels will definitely need to be that, as the shares could well prove to be a choppy investment if the revenue growth starts to show any signs of faltering.
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