Sometimes trading, like photography, is about being in the right place at the right time. One example: The latest action in shares of action camera maker
shares of which rose 11% on Tuesday.
One reason seems to be a Monday news release, in which GoPro (ticker: GRPO) said cameras bound for the U.S. will be made in Mexico starting next month, while ones headed elsewhere will stay in China. The reaction came even though the release essentially restated a similar news release issued in December, in which it said “most” U.S.-bound production was leaving China by “the summer of 2019.”
The Mexico bit, in particular, was announced in February, and management said then that it hoped the change would also improve supply-chain efficiency and generate modest savings.
“Our decision to move most of our U.S.-bound production to Mexico supports our goal to insulate us against possible tariffs, as well as recognized some cost saving and efficiencies,” Chief Financial Officer Brian McGee said on a conference call last week.
With U.S.-China trade tensions still high, the notion that the company, its turnaround still in progress, is ahead of the game offers some reassurance. The stock, meanwhile, was recently within pennies of 52-week highs.
GoPro announced first-quarter financial results last Thursday, turning 20% year-over-year revenue growth and widening gross margins, although investors didn’t immediately gush over its numbers. Wall Street continues to predict a profit for the year, which would be the company’s first since 2015.
FactSet’s average price target for GoPro’s stock is $7.50, not far from current prices. There aren’t many Buy ratings on the stock, though analyst sentiment has improved notably from early 2018, when the company began its turnaround effort in earnest. (“It takes a bit of time to restore confidence with investors,” Chief Executive Officer Nick Woodman said Tuesday at a
Nobody thinks GoPro is heading back to its post-IPO highs above $80. Success from here would look something like a strong holiday-season product line, continued innovation, rising average selling prices, and high-margin subscription-services growth—in short, evidence of continued, consistent, execution.