GoPro Gives Up on Drones

Following layoffs last week, GoPro today delivered another rough round of financial numbers in its fourth quarter earnings call and announced that it's dropping development of drones.

Revenue fell short of estimates by a wide margin. The company expected to rake in $470 million in Q4, but came in at just $340 million.

GoPro opened to a big IPO in 2014, with stock selling for around $35 per share. Later that year it climbed to its highest point, just under $100. Today it's trading at around $6 per share. Revenue has steadily declined year over year, with each quarter seemingly worse than the last.

The company made some efforts to boost sales. It cut prices of its Hero5 and Hero6 cameras by $100 each in December. And it's doing some things to cut costs going forward. Nick Woodman, the company's enthusiastic CEO, is cutting his compensation to $1 for 2018. There's also a chance that GoPro will be sold to a private interest. The company has hired JPMorgan to faciliate a sale. We don't know if there's a potential suitor, or who that suitor may be.

Goodbye Karma

For now, however, it's saying farewell to drones. The Karma will remain on sale until there aren't any left. But we won't see any more roll off the production line, and we won't see a Karma 2. The company cites tight margins and hostile regulations as the reasons. It does promise to continue to service and support customers who have already purchased a Karma.

Smartphones are also a big factor. You don't want to strap an $800 phone to a surfboard, but for more casual video use, the 4K video offered by flagship phones is good enough. Especially coupled with a gimbal—the new DJI Osmo Mobile 2 stabilizes smartphone footage for just $130.

GoPro is going to have to compete at lower prices to sell cameras. Keeping the Hero5 in the lineup at $300 is a good start. The company has touted its $200 Session as a low-cost option, and while it's tough and delivers quality video, its lack of an LCD makes it more cumbersome to use than it should be.

GoPro also has its premium Fusion 360-degree camera on the market now. With the demise of the Karma, it's the most expensive consumer product the company makes at $700. We'll see if that price holds steady or if it enjoys a reduction to help move units.

I don't see a day when GoPro's stock soars back up to $100 a share. But, for the sake of consumers who need a go-anywhere, do-anything, fully ruggedized camera, perhaps the company can survive as a leaner version of itself, even if it's one that has to sell to a smaller niche rather than a huge mass market.

Rob Marvin contributed to this article.

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