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I raised more than a few eyebrows back in August 2014 when I told you that I wouldn't touch GoPro Inc. (Nasdaq: GPRO)'s IPO with a 10-foot selfie stick. And I lit up the techno-cognoscenti when I noted that the stock would ultimately fall so low as to be valuable only as a takeover target because GoPro stock couldn't stand on its own merits.
Last Thursday, the stock jumped 11.49% in a single session on rumors that Apple Inc. (Nasdaq: AAPL) may buy the beleaguered tech darling, leading millions of investors to wonder if they should jump on the bandwagon, too.
In a word – nope.
Today we're going to talk about why GoPro stock remains a risk you don't want or, more specifically, need in your portfolio ahead of a rate hike.
And I'll tell you what you want to buy instead.
When to Pass Up a 79.48% Discount
I've been negative on GoPro from the very beginning and I remain so today.
The initial rise following the company's IPO was nothing more than traders making hay on the back of assumptions that ranged from the overly optimistic to the downright ludicrous.
The company's stock has fallen 79.48% since September 2014, and the "big move" that got everybody so excited last week isn't worth the risk. Not for individual investors, anyway.
The company still has big problems, just like every camera company ahead of it, which means the company isn't worth what most investors think.
There's no compelling evidence, for example, that GoPro can provide anything other than a temporary alternative to other wearable tech with a better form factor. Examples include cameras from iON and JVC and sport technology like the Recon Jet.
Remember Flip?
That was the revolutionary video camera system that Cisco Systems Inc. (Nasdaq: CSCO) purchased in 2009 for a jaw-dropping $590 million at the time. Like GoPro, many believed it represented the future and was therefore worth gobs of cash.
Less than two years later, Cisco killed it.
I'm not saying Apple would kill GoPro, but the parallels are hard to ignore. The Flip was just as innovative then as GoPro is today. Not many people remember this, but Flip sales were actually pretty darn respectable when Cisco surprised everybody.
Here's the Bottom Line
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 High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... 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.
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