GoPro Inc. made fans and investors hopeful with the launch of a new camera, but the company messed up the execution and sent the stock into an enormous plunge.
Sound familiar? It should, because this is not only the story of what happened to GoPro on Thursday, but the events of last year, when the company mismanaged its Hero4 launch. After bungling that event, GoPro Chief Executive Nick Woodman defiantly ramped up expectations for this year’s offerings, proclaiming, “In 2016, we are committed to delivering the breakthrough experience we’ve all been waiting for.”
Yeah, not so much. GoPro’s launch of the Hero5 camera and Karma drone were befouled by production issues, executives said Thursday. GoPro had reduced inventory of older cameras in preparation for a wave of new products, and now expects to be unable to provide the action cameras fans want in their stockings this holiday season.
“As a consequence of our compromised production ramp, we were unable to fully restock channels, which have been cleared of legacy product during the third quarter,” Woodman said in a somber performance on Thursday’s conference call. “And furthermore, we anticipate difficulty catching up to meet forecasted demand during the fourth quarter.”
For the third quarter, GoPro’s revenues and units sold declined not only year-over-year, but also from the same quarter two years ago. Woodman’s admission that GoPro will not be able to satisfy demand for the fourth quarter could be even more damaging, however, as the holiday season may have been GoPro’s final hope to convince investors that it can still grow.
Shares dove 20% in premarket trade Friday, continuing a stunning downfall since summer 2015, just before the Hero4 launch. GoPro, which traded for more than $80 a share shortly after its 2014 initial public offering, fell to less than $10 ahead of the open.
That puts the stock in danger of suffering the biggest one-day percentage decline since it went public. Shares have plunged more than 66% since August 2015; the S&P 500 SPX, +0.03% has gained 6.2% in that time frame.
The company forecast $600 million to $650 million in revenue for the fourth quarter, and brought down its full-year revenue guidance, from a range of $1.35 billion to $1.5 billion to a range of $1.25 billion to $1.3 billion. GoPro’s forecast for next year is not reassuring, either. The company expects to record yet another loss, though it projects an adjusted profit — for now.
“It’s really tough for investors to take its guidance very seriously,” Jackdaw research analyst Jan Dawson said in an email, adding, “Every quarter the excuses are different, but the performance trends are pretty similar.”