Direct Sales Strategy Helped GoPro (GPRO) Stock Surge, Improve Profitability


GoPro Inc.’s (GPRO) stock price surged 3.70% on Wednesday and ended the session at $7.00. The action camera manufacturing company reported improved profitability and revenue growth in third quarter 2020 results announced last week. The improvisation came on the heels of company transition from marketing and selling its products through retailers and distributors to direct sales. Launch of new camera in the reported quarter also helped the company improve its results.

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GoPro’s third quarter revenue rose 114 percent to $280.5 million, significantly above the estimates of Wall Street. The good news was a $0.2 profit per share, while the company recorded a per share loss of $0.42 in the same quarter a year earlier.

The number of GoPro app subscribers increased by 65 percent to 501,000 subscribers. Gross margin rose to 36.2 percent compared to the gross margin of 23.4 percent in the year ago quarter. Compared with a year-ago loss of $53 million, adjusted EBITDA was $39 million in the reported quarter.

Gopro achieved increased profitability with the introduction of the new camera, the transition to direct sales and subscription to the service. Many customers buy a new HERO9 Black camera via the company’s own website and receive an annual subscription that includes unlimited cloud storage, high-quality video streaming service, camera repair warranty options, accessory discounts, etc. The company’s solutions include the production and editing of original content, which is why demand from bloggers and other users increased for those solutions.

Based on the fact that the company now has a more marginal market, Wedbush analysts lifted their target price for GoPro Inc. (GPRO) shares to $8 after the announcement of third-quarter results. Customers are now making purchases directly from GoPro, and this not only includes the camera units, but also app subscribtion. At the same time, the GoPro product range is expanding and becoming more diversified to include a broader variety of applications.


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