Key points:
- GoPro reported third-quarter earnings after the close last week Thursday
- Its shares tumbled following the release
- Wall Street analysts downgraded the stock
GoPro (NASDAQ: GPRO) reported its third-quarter results after the close last week Thursday, sending its shares lower, adding to its share price losses in 2022.
The camera company topped analyst expectations for profit and revenue, reporting earnings per share of $0.19 on revenue of $305 million. Analysts expected earnings per share of $0.17 on revenue of $298.85 million. However, the company’s revenue declined 4% year-over-year.
GoPro shares are down over 52% this year after closing Friday’s session down over 1.8%. The stock initially hit a low of $4.50 per share before recovering to $4.91.
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“In Q3 GoPro delivered revenue at the high-end of guidance and solid GAAP and non-GAAP earnings,” said Nicholas Woodman, GoPro's founder and CEO. “GoPro's resilience during this challenging economic environment is testament to the meaningful role GoPro plays in the lives of the world's most active and creative people.”
GoPro’s subscription and service revenue rose 4% year-over-year to $99 million, representing 32% of total revenue, with the company surpassing 2 million subscribers in August.
Despite the top and bottom line beat, analysts at JPMorgan and Oppenheimer downgraded the stock based on its worse-than-expected guidance, which it spoke about in its earnings call.
JPMorgan analyst Paul Chung downgraded GoPro shares to Neutral from Overweight, cutting the firm’s price target on the stock to $6 from $9 per share based on a “tough” macro backdrop, softening consumer spending and limited catalysts ahead. The analyst told investors in a note that GoPro’s fourth quarter guidance “missed materially,” driven by currency headwinds and a reduction in inventories at big box retailers. In addition, he added that GoPro said gross margins are expected to be well under its long-term margin targets. As a result, the analyst believes investors will need to wait until the second half of 2023 for a rebound back in margins.
Oppenheimer’s Martin Yang downgraded GoPro to Perform from Outperform, not assigning the stock a price target. Yang told investors in his research note reacting to the earnings release that GoPro reported “decent” results despite a challenging macro environment but significantly reduced its Q4 and fiscal 2022 guidance. He cited the reduced gross margin outlook and lack of macro recovery visibility for the downgrade.