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  • Writer's pictureIshfaaq Peerally

GoPro Stock Analysis

GoPro Stock Analysis


  • Changing business model to DTC with, hence eliminating the middleman, and improving margins

GoPro Stock Analysis

  • Subscriber count to increasing rapidly

  • Average Selling Price (ASP) increasing rapidly

  • Possibility of returning cash to shareholders next year

GoPro Stock Analysis


  • Rely on only one product and mobile phone cameras are more suitable for most people

  • Large increase in subscriber count for comes mostly from automatic one-year free subscription from purchase of camera → No certainty of renewal

  • 70% of votings rights in the hands of CEO, Chairman, and founder of the company

  • Declining reveenues in recent years

Financial Analysis:

GoPro Stock Analysis

  • Massive increase in net income this year (and this quarter) was from a one-time tax benefit


  • My personal Biases:

    • Looks undervalued but skeptical of ability to shift business and grow revenues

    • Whole investment will depend on that business shift

  • Assumptions:

    • Revenues will grow annually by 15% in the next 5 years while the retail revenues falling by 5% per year

    • Gross profit margin gradually increasing to 43%

    • Pretax expenses 35% of revenues

    • Net income 75% of operating income

    • FCF 80% of net income

GoPro Stock Analysis

  • Discount rate of 13% for FCF

  • Terminal growth rate of 2%

  • Margin of safety of 20%

GoPro Stock Analysis

  • Exit Multiples based on P/FCF Ratio

  • Sales 20% higher in bull case and 20% lower in bear case

  • Shares outstanding stays the same

GoPro Stock Analysis


  • Looks overvalued

  • Only scenario where it is a good investment is in the case whereby the business shift is a success

  • Too speculative for me

GoPro Stock Analysis

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