Why GoPro Inc's Shares Jumped 23% in January

GoPro's Hero 5 lineup of products. Image source: GoPro.

What happened

Shares of action-camera maker GoPro Inc (NASDAQ: GPRO) jumped 23.4% in January according to data provided by S&P Global Market Intelligence, as investors got a little more bullish on the company's prospects.

So what

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There have been a number of daily factors driving GoPro's stock higher, like a positive analyst note and BlackRock increasing its stake in the company. The broader story here is that investors are becoming more bullish on the company's upcoming fourth-quarter report, as well as its future sales of action cameras and drones. In fact, the Karma drone returned to the market on Wednesday, February 1 after a recall that threw investors for a loop.

What should be noted is this move is purely speculative and could be unraveled after earnings are released. So investors should keep an eye on important metrics like revenue, inventory, and gross margins because if those are improving, GoPro's stock could have more room to run.

Now what

Given the volatility of GoPro's shares in the past year, I don't think the move in the past month should be a sign that the worst is over. If fourth-quarter results fall short of expectations, or if Karma crashes again for some reason, the stock could fall rapidly, once again. But investors may be seeing some sort of light at the end of the tunnel here, and if GoPro can learn from past mistakes, it could be on its way to being a great long-term stock for investors.

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Travis Hoium owns shares of GoPro. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.