Why GoPro Inc's Shares Plunged 11% in March

MarketsMotley Fool

What happened

Shares of action camera maker GoPro Inc (NASDAQ: GPRO) fell 11% in March, according to data provided by S&P Global Market Intelligence, as the company made seemingly desperate moves to grow sales. After a disappointing year in 2017, this year isn't shaping up to be much better.

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So what

The first deal announced in March was a licensing agreement with Jabil, the manufacturer who makes GoPro's cameras. The company will be able to use GoPro's technology to sell hardware to third parties, targeting video conferencing, robotics, and self-driving cars.

Late in the month, GoPro launched a $199.99 entry-level camera called Hero with the same form factor as the Hero6 Black and a 2-inch touch display. The camera replaces the Session cameras that never quite caught on in the market.

Now what

I wouldn't be surprised if the new Hero camera is a big hit, but it will hurt GoPro's average sale price this year. If customers downgrade from the $399.99 Hero6 Black to the Hero camera it'll be a big loss, and I'm not sure any volume increase will make up for the lost sales.

GoPro is trying to get back on its feet after three years of disappointing results and product flops (remember the Karma drone). But the market isn't seeing a licensing deal and a low-price camera as the things that will make GoPro profitable again, and that's hurting the stock right now.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has a disclosure policy.