Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the last 12 months is 47.6%. But there is no question some big-name stocks performed better than others along the way.
GoPro’s Run: One company that has been a great investment in the last year has been camera maker GoPro Inc (NASDAQ:GPRO).
Like many other companies, GoPro’s business took a big hit from the 2020 COVID-19 pandemic.
In fact, in 2019 GoPro reported an EPS loss of 10 cents on $1.19 billion in revenue. In 2020, those numbers dropped to an EPS loss of 45 cents on $892 million in revenue.
The pandemic masked what many investors see as a positive long-term transition for GoPro from a focus on camera hardware sales to software subscriptions. In addition, economic shutdowns forced the company to reduce its bloated retail channel inventory. GoPro didn’t launch any new products in 2020, but it did report record Black Friday and Cyber Monday sales during the holiday season.
At the beginning of 2020, GoPro shares were trading at $4.40. By the beginning of March, the stock was down to $3.77 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
GoPro bottomed at $2 during the pandemic-driven March sell-off. Fortunately for GoPro investors, the dip did not last long.
By June, GoPro shares were back above $5, and the stock got as high as $5.74 in August prior to an extended consolidation period. GoPro finally broke out to new highs in October, eventually making it as high as $13.79 in March of 2021.
GoPro In 2021, Beyond: GoPro shares have since pulled back to around $10.13 as investors have taken profits in the stock’s big run. Investors have reasons for optimism in the next several quarters, but GoPro will first have to demonstrate that its business model transition from hardware to software subscriptions is paying off.
GoPro management has said every million subscribers equates to about $50 million in revenue and $25 million in operating profit. In the next several quarters, subscriber growth and new product launches will be absolutely critical for GoPro.
Wall Street’s expectations are clearly high at this point.
GoPro investors who bought one year ago and held on have already generated a big return on their investment. In fact, $1,000 in GoPro stock bought on May 6, 2020, would be worth about $3,299 today.
Looking ahead, analysts are expecting it might not be smooth sailing for GoPro in the next 12 months. The average price target among the four analysts covering the stock is $8.95, suggesting 11.4% downside from current levels.