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Don’t be confused. Buying stock thinking a company is an acquisition target is not an investment. That clearly doesn’t align with our unwise philosophy, which recommends (among other things) holding on to proven, high-quality brands over the long term. All-or-nothing gambling is not ours.
But sometimes, in a blue moon, there just happens to be one potential acquisition candidate. because The market seems to be underestimating the company’s brand, business, and potential.
Probably there go pro (NASDAQ:GPRO) It’s right now. The stock’s dismal performance over the past decade may have erased much, if not all, of the expected downside. The market may even be underestimating where the company will be in a few years.
Still, it may not be the best fit for every investor’s portfolio. Admittedly, the name probably doesn’t make sense to many investors. But if you see a potential high-risk, high-reward opportunity in beleaguered GoPro stock, that’s not a bad idea.
More hype than ever
To say that GoPro failed to live up to the hype of its 2014 initial public offering is a gross understatement. The company’s initial stock price was nearly $28, but quickly soared to nearly $100 as investors scrambled to get a piece of the young action camera company. The stock is currently testing record lows just above $2. This is a 98% drop from its peak.
What went wrong? It’s not that difficult to understand. The world didn’t need anywhere near the number of action cameras GoPro suggested it needed. This year’s expected sales are $1 billion, well below the annual high of $1.8 billion set in 2015.
Analysts do not expect sales to grow next year either. The consensus among the few analysts still monitoring this stock suggests it could return to some modest gains in 2025, but still, it’s not enough to matter. Not – at least not yet.
However, there’s still a bullish case to be made here, even if it’s a bit unconventional. This is the value of her GoPro to prospective buyers and its low cost. Now you could buy an entire company for about one song. Even if the suitors don’t realize this, the market as a whole might.
It’s definitely quite affordable
According to the latest research, GoPro’s market capitalization is just $330 million. This is much less than the average acquisition price in the technology sector, which includes: microsoftacquired digital advertising platform Xandr for $1 billion in 2021. alphabetwill acquire augmented reality name Raxium in 2022 for a cool $1 billion. Deals of this size no longer attract attention. In many cases, the acquirer can do this simply by writing a check.
That doesn’t mean you can buy a GoPro overall for just over $300 million. There are also debts and other debts to cover. The company has approximately $280 million in short-term debt and an additional $133 million in long-term debt. Meanwhile, GoPro also has nearly $1 billion in physical assets, including inventory, accounts receivable, real estate, and about $200,000 worth of cash.
While assets are never likely to be worth as much as expected when sold (and debt can be interestingly larger than the initial number), the most significant difference between GoPro’s assets and liabilities is The likely net difference is still considered to be greater than the company’s current market. Capitalize.
The prize is the brand and basic technology.
But the real value here is not the company’s assets or existing business. It’s the brand name itself and the technology that underpins it. Get your GoPro action camera brand right did it There will be far more than there is now. Admittedly, it’s still not entirely clear what that will look like.
We know their technology is cutting edge. Its cameras are consistently rated among the best within the action camera category. But what’s missing is a digital ecosystem large enough to give GoPro camera owners a reason and a way to not only use their devices, but also share their videos with others. In this vein, the user base and annual revenue of GoPro’s subscription-based video sharing and viewing platform have stagnated at just 2.5 million and $100 million, respectively.
Perhaps something closer to Alphabet’s YouTube would be a more powerful (and revenue-generating) platform. We’ve certainly seen Alphabet do something like this before. In 2021, the company acquired then-struggling fitness tracker company Fitbit in very similar circumstances. And the company continues to promote its branded fitness devices and drive users to Google’s broader online ecosystem.
apple has also been suggested as a potential GoPro match, but the potential synergies of that combination are less clear. Still, it doesn’t even have to be another organization to unlock the potential of an action camera company. GoPro itself could do the same thing, even if it took a little more effort, new capital, and a little more out-of-the-box thinking.
In fact, we are already doing so. Its new initiatives include low-cost, entry-level cameras. It’s also forging new sponsorships and partnerships, any of which could spark an explosion of interest in its technology. For example, the company acquired motorcycle helmet maker Forcite in January, tapping into a $6 billion market driven by consumers who like to record videos of themselves riding.
More importantly, there’s still something This can be achieved with the brand and its technology. Whether it’s the company itself or its suitors that made it happen, GoPro stock is pretty cheap considering the progress it’s made over the past decade. The fact that GoPro is already operating near breakeven only strengthens the bullish argument.
Note that this stock may not be suitable for everyone, as it poses above-average risk and above-average volatility. If you can tolerate risk, you may want to maintain a relatively small position.
Should you invest $1,000 in a GoPro right now?
Before buying GoPro stock, consider the following:
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Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. James Brumley holds a position at his Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
How to Take Shots with a GoPro Stock was originally published by The Motley Fool.
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