GoPro Turns Bullish on Impressive 1Q17 Rev. Outlook

GoPro Turns Bullish on Impressive 1Q17 Rev. Outlook
February 28, 2017

Earlier this month, action camera manufacturer Gopro Inc (NASDAQ: GPRO) reported fiscal 2016 fourth-quarter earnings that exceeded analysts’ estimates. However, the stock has lost more than 10% so far and closed at $9.66 on Monday. Lower than anticipated fourth-quarter revenues primarily caused a downfall in the share price. We anticipate a bullish trend reversal due to the reasons mentioned below.

The San Mateo, California-based company reported fiscal 2016 fourth-quarter revenues of $540.62 million, up 23.8% from $436.60 million in the similar quarter last year. The Wall Street analysts expected GoPro to report revenues of $576 million. It is the second highest revenue quarter in the company’s history.

For 4Q16, the manufacturer of Hero 5 camera recorded widened GAAP net loss of $115.71 million or $0.82 per share, from $34.45 million or $0.25 per share in 4Q15. The quarterly loss includes restructuring costs of $37 million.

The Q4 non-GAAP net income was $42.37 million or $0.29 per share, versus a net loss of $11.40 million or $0.08 per share in the prior year’s similar quarter. Analysts had expected earnings of $0.21 per share.

During the recent quarter, Hero 5 was the best-selling camera in the US and EMEA (Europe, Middle-east, and Africa) markets. According to NPD’s retail tracking service, GoPro’s products took three of the top five spots in the camera category. In China, sales of GoPro products increased 61% y-o-y in the fourth-quarter. The company is planning to enter several new markets in the months to come.

During the recent quarter, the Quik Mobile App was downloaded four million times, which represents a 30% sequential increase. Monthly active users of Quik Mobile tripled on a y-o-y basis.

For 1Q17, GoPro anticipates revenues of $200 million, with an error margin of +/- $10 million. Notably, for 1Q16, the company posted revenues of $184 million. The GAAP and non-GAAP gross margin is expected to be in the low 30% for the current quarter. Thus, considering the revenue growth and strong first-quarter outlook, fundamentally, the stock is expected to remain range bound with bullish bias.

The price chart shown below indicates a firm support for the stock at 9.15. The rising stochastic RSI indicator also confirms the underlying bullishness in the stock of GoPro. Thus, we can expect the stock to appreciate to the next resistance level of $13.

GoPro - Technical Analysis - 28th February 2017

A binary trader can contemplate on purchasing a high or above contract to benefit from the probable uptrend in the share price. The trader should pick the contract when the stock trades near 9.50. Finally, in the interest of trader, it is better to choose a validity period of seven days for the contract.


Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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