GoPro Inc. shares are demonstrating their characteristic volatility following a spectacular surge driven by retail investor enthusiasm. The stock experienced a notable pullback in the latest session, pressured by profit-taking after its recent meteoric rise and emerging concerns about intensified competition within the action camera sector. This downturn raises questions about the sustainability of the company’s ongoing recovery narrative.
Mixed Quarterly Results Underlie Speculative Activity
Beyond the recent speculative trading, GoPro continues to navigate a complex fundamental landscape. The company’s August earnings report for the second quarter presented a mixed picture, revealing both operational improvements and persistent challenges. Revenue contracted by 18% year-over-year to $153 million. However, the company made significant strides in operational efficiency. Its gross margin expanded considerably from 30.7% to 36.0%, while operating expenses were reduced by 32%. These improvements contributed to a halving of its adjusted loss per share, which narrowed from $0.24 to $0.08.
DJI Announcement Triggers Profit-Taking
The equity’s dramatic movements this week highlight its sensitivity to both sentiment and industry developments. On Monday, retail investors’ renewed fascination with meme stocks propelled GoPro shares to a striking 15.4% single-day gain. This euphoria proved short-lived. By Tuesday, the stock had reversed course, declining 5.9% as news circulated of a new competing product from Chinese manufacturer DJI. A leaked device, tentatively named the “Osmo Nano,” threatens to further intensify competition in the already crowded action camera market.
Should investors sell immediately? Or is it worth buying GoPro?
Artificial Intelligence Initiative Shows Early Promise
A key element of GoPro’s growth strategy centers on a newly launched artificial intelligence program. Since August, U.S. customers have been able to license their video content to the company for AI training datasets, receiving 50% of the generated revenue in return. The pilot initiative has yielded surprisingly strong results, with 125,000 hours of footage submitted within just two weeks—news that previously sent the stock 9.1% higher. With an archive exceeding 13 million hours of content, GoPro potentially stands to unlock a substantial new revenue stream through this program.
Path to Profitability and Pending Patent Decision
Company leadership has expressed confidence in its turnaround plan, projecting a return to both growth and profitability for the second half of 2025. For the current third quarter, GoPro anticipates revenue of approximately $160 million alongside an adjusted per-share loss of $0.04. A significant near-term catalyst awaits in November, with a ruling expected in the company’s patent infringement case against rival Insta360. A favorable outcome could provide additional momentum for the firm.
The central question for investors remains whether this new AI-driven initiative can generate sufficient revenue to offset weaknesses in the core hardware business and an increasingly aggressive competitive environment.
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