GoPro's Revenue Rises, But Its Shares Fall

Wearable Camera Maker Issues First Quarterly Report After Its Hot IPO

GoPro Inc., GPRO +3.57% in its first earnings report after a hot initial public offering in June, reported better-than-expected second-quarter results but still saw some of the air come out of its highflying stock.

The San Mateo, Calf.-based company makes a wearable high-definition video recorder that first appealed to surfers and cyclists. It is now the top-selling camcorder in the world by volume, according to market researcher IDC.

A big question for GoPro is whether it can keep selling $200 to $400 video cameras when there is little to stop rivals from imitating the hardware at lower prices. As smartphones improve their video capabilities, consumers have fewer reasons to buy dedicated cameras.

At the end of June, GoPro's IPO priced at $24, at the high end of a projected range of $21 to $24. The shares rose 31% on their first trading day and have since doubled.

Thursday, following the company's earnings report, shares fell 11% in after-hours trading to $42.60 despite better-than-expected results.

For the second quarter, GoPro said its earnings excluding certain costs were $11.8 million, or 8 cents a share, compared with the year-ago loss before items of $3.2 million, or 3 cents a share, a year earlier.

Revenue rose 38% to $244.6 million.

Analysts polled by Thomson Reuters had projected earnings of 6 cents a share on revenue of $238 million.

GoPro said the strong quarter reflected higher demand for its Hero 3+ Black Edition and for accessory products. The company said the popularity of its YouTube videos is "fueling our virtuous cycle whereby viewership of GoPro content drives sales."

To stay ahead of potential rivals, GoPro has been trying to make money from the videos generated by the company and by millions of users. GoPro started a TV-like channel on Microsoft Corp.'s Xbox videogame console and has a channel on in-flight entertainment systems for Virgin America Inc. that features sky diving and other adventurous activities.

Including all items, GoPro reported a bottom-line loss of $19.8 million, or 24 cents a share, compared with a loss of $5.1 million, or 6 cents a share, a year earlier.

Total operating expenses increased to $119.5 million from $62.8 million.

Several analysts began coverage of GoPro with the equivalent of a "hold" rating. Barclays analyst Joseph Wolf wrote "we can think of few products that so perfectly capture the era of the 'selfie' and the 'digital native' as the GoPro," but he believes there is "limited upside" for the stock.

GoPro Is Crashing After Founders Find A Way Around The Lock-Up Restriction

GoPro is breaking its lock-up restriction.

On Wednesday, GoPro announced that founders Nick and Jill Woodman would gift about 5.8 million shares from their personal stake in the company to the Nicholas + Jill Woodman Foundation.

Under an agreement with JPMorgan, the Woodmans will be released from the lock-up restriction that prevents company insiders from selling shares within a certain timeframe after a company's public debut, typically about 180 days. In other words, these shares wouldn't have been allowed until some time in 2015.

GoPro shares have been on an absolute tear, up 177% since its IPO. In early trading on Thursday, shares of GoPro were down more than 4%.

Here's the full release from GoPro:

GoPro Shares Crushed After Report Links Camera To Michael Schumacher's Injury

GoPro shares are getting crushed following a report that said a GoPro camera may have been responsible for the seriousness of the skiing accident involving Formula One driver Michael Schumacher.

In early trade on Monday, shares of GoPro were down as much as 10% amid another day of broad market weakness, with the Nasdaq losing the most ground among the major averages.

According to Eurosport, French F1 commentator Jean-Louis Moncet told radio station Europe 1 that the problem for Schumacher was not his fall but the GoPro camera he had mounted to his helmet.

Per Yahoo's report: "'The problem for Michael was not the hit, but the mounting of the Go-Pro camera that he had on his helmet that injured his brain,' Moncet explained to the radio station."

This is not the first time that a mounted camera has been pegged as possibly increasing the severity of Schumacher's injury, but it appears to be the first time GoPro was mentioned by name.

A report in The Telegraph from back in February, shortly after Schumacher's accident, said that Schumacher's helmet smashed after his fall, but that the camera mounted to his helmet did not.

That report said experts were exploring whether "a solid object between a helmet colliding with a rock would weaken the structure."

Shares of GoPro Inc. GPRO, -8.86% skidded on Friday after analysts at Oppenheimer initiated coverage of the stock with a sell rating and a price target of $45. Oppenheimer's Andrew Uerkwitz noted that although GoPro is a powerful brand, it will face challenges as it expands into a broader market, including competing with smartphones. "While we believe this will prove difficult, we also expect several new entrants to the capture market that will result in lost wallet share or lower gross margins, and ultimately missed expectations," said Uerkwitz in a report. GoPro shares fell 9.6% to $71.51.

GoPro Prices Secondary Offering at Huge Discount: Opportunity and Risk

GoPro Inc. (NASDAQ: GPRO) announced last week that it will have a secondary offering of up to $800 million in stock. A new filing indicates that the offering will be about 10.4 million shares, and the company has released the pricing for the offering as $75 per share. At the $75 pricing, the total filing is worth about $777 million.

At the end of September, a total of 99.76 million class B shares and 26.29 million class A shares were outstanding. The largest shareholder is the Woodman Family Trust, which is directed by GoPro’s founder and CEO, Nicholas Woodman, and by Jill R. Woodman. The trust owns 45 million class B shares, which are identical in value to class A shares, but each class B share gets 10 votes.

Nicholas and Jill Woodman will sell about 4.1 million shares from trust. The Silicon Valley Community Foundation is not selling shares. This may cause confusion, given the reports from over a month ago that the Woodman sales would not take place until next year, because the Silicon Valley Community Foundation has said it will not sell shares until 2015. Other major selling shareholders in this offering are Riverwood Capital, offering 1.63 million shares, and Foxteq Holdings, offering a million shares.

There are a couple of ways to think about this. Some investors will think this was too large a discount and that insiders are just getting even richer. The other side is that investors who missed the GoPro bandwagon may feel that this gives them an opportunity to buy on a serious pullback — after all, GoPro stock has now lost almost a quarter of its value from the peak, and its stock price was down $10 in just two trading sessions.

The stock has a consensus analyst price target of $81.60 and a post-IPO trading range of $28.65 to 98.47. The market cap is nearly $10 billion.

Here is GoPro’s Use of Proceeds from the filing, and it is unusually long:

GoPro rises, even with CEO’s plan to cash in shares

A filing with the U.S. Securities and Exchange Commission said late Monday that GoPro will offer almost 12 million shares in a coming secondary offering. Of that total, Chief Executive Nick Woodman plans to sell 4.1 million shares of his own, via his Woodman Family Trust. Other GoPro shareholders getting in on the selling game include Riverwood Captial, Foxteq Holdings and GoPro itself, which will sell 1.3 million shares. Altogether, the secondary offering will be worth almost $970 million, based on GoPro’s Monday closing price of $81.50.

Under normal circumstances, when a CEO files to sell a $334 million stake in his company, the reaction of the marketplace is that it must be time to get out. But nothing about GoPro is normal, as evidenced by the company’s shares rising more than 5% Tuesday, to $85.57.

Sean Naughton, of Piper Jaffray, said that “it is a little bit of a head scratcher” as to why GoPro’s shares would get such a lift even though Woodman and others are planning on selling some of their holdings. But Naughton said that since the offering includes secondary shares there “should be no real change in value on the stock.”