Markman Capital Insight

Can GoPro Get Back its Mojo?

In the era of Facebook (FB) triumphalism, action camera innovator GoPro (GPRO) seemed to capture the zeitgeist of social media braggadocio. It's small, powerful video cameras and body mounting accessories enabled everyone to upload clips of their best X-Games inspired stunts and travel experiences.

Shares surged from summertime lows near $37.50 to a high of $98.47 in October before melting lower amid "camera on a stick" derision, fears of cheap knockoff competitors out of China, and doubts about the company's media channel aspirations.

After falling back to a low of $37.13 earlier this month, shares are poised to break above their 50-day moving average for the first time since November and break out of its long six-month downtrend. The catalyst is the upcoming launch of the HERO 5 camera system later this year that promises 8K video resolution and longer battery life.

Like the incremental upgrade cycle of Apple (AAPL), which will knock down existing products to more affordable levels, hook new customers, and encourage an upgrade cycle.

Buyers have been moving back in as valuations have improved. Thursday morning, analysts at Barclays Capital highlighted that while the stock is trading at 3.5x 2015 and 2.9x 2016 revenue -- which isn't cheap on an absolute basis -- this is in line with other consumer electronics stocks that have much lower top-line growth rates. Moreover, the post-IPO lockup period has come and gone; removing the threat of a wave of delayed selling pressure.

Over at Baird, analysts upgraded the stock to Outperform as the company enjoys brand equity and distribution strengths in the still young action camera market. They are looking for revenue growth of 23% this year and 20% in 2016 resulting in 27% earnings per share growth next year.

For more on the GoPro story, its reflection of society, and the risks of self surveillance, be sure to check out this slightly stuffy New Yorker piece