My friends were going camping recently and their bags looked like something from a space shuttle, with cords sticking out of nearly every pocket.
"What on earth have you got in there?" I asked.
A GoPro, chargers, mounting stands, waterproof containers… I tuned out the rest, to be honest.
Just like I tuned out GoPro's IPO, and will continue to ignore the stock for the foreseeable future.
It's simply not worth the investment. A trade, maybe, and only then if you're nimble and have great risk management discipline. Here's why…
Make Sure You Miss "IPO Froth"
It could just as easily have gone the other way – and, in fact, did exactly that, hovering at around $38.80 yesterday.
The initial rise was nothing more than IPO froth based on assumptions ranging from the overly optimistic to downright ludicrous, leading one analyst to compare the IPO to Facebook Inc.'s (Nasdaq: FB). Like that's a great example of a properly priced public offering – the underwriters were sued, investors got taken to the cleaners, trading got stopped, and Wall Street hyped numbers as usual. But I digress…
GoPro's got big problems ahead of it – just like every camera company before it – and that means the company isn't worth what many think it is.
I know. I know. The GoPro cognoscenti are screaming that the company's products are the best at capturing people doing all sorts of wacky, wild, daring, and imaginative things. You'll get no disagreement from me.
But there is no compelling evidence that GoPro can provide a lasting alternative to the greatest threat to the company's relevance – smartphones.
And that's the crux of the issue. The company offers a feature – albeit a really cool one.
There's no reason whatsoever to believe that its competitors won't catch up… that Apple and others won't come out with products that match or exceed GoPro's capabilities or be easier to use.
I can already buy, for example, top of the line waterproof, HD and Wi-Fi enabled cameras from iON and JVC, both of which have better form factors and don't feel like I have a door in the wind on top of my motorcycle helmet.
Then there's wearable sport technology like the Recon Jet and the Telepathy One on the horizon. Both are considered to be competitors to Google Glass but will easily cross over.
To be fair, I have no doubt that GoPro's management is aware of this problem. And with the $600 million they raised from their IPO, they'll have the resources to tackle the problems I've just outlined.
But, I don't find that especially reassuring as an investor when looking at GoPro stock.
The $590 Million GoPro Predictor to Remember
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.