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The rise of GoPro (NASDAQ: GPRO) is a story about the perfect storm of versatile, durable and high-resolution cameras that can be mounted on just about anything – and the ability to instantly share this content for free on platforms like Alphabet’s (NASDAQ: GOOGL) YouTube.
Now we’re currently on the brink of the virtual reality age. For years and years we’ve seen science fiction predictions and even depictions of virtual reality headsets that offer a fully immersive experience to the user. And with Facebook (NASDAQ: FB) set to release the Oculus Rift virtual reality headset in the first few months of 2016, virtual reality’s day has finally come.
Virtual reality content is somewhat complicated to shoot.
But in the same way that GoPro made it easy and relatively inexpensive to shoot your own point-of-view action sports videos – and YouTube made it easy to share them – the two companies are teaming up to make sure that sharing virtual reality content is just as simple.
Recall that at the Google I/O Conference on May 28, Alphabet – née Google – announced a partnership with GoPro to produce and distribute virtual reality content on YouTube. GoPro has now released two virtual reality camera rigs, one of which features 16 individual GoPro cameras arranged in an outward-facing ring.
GoPro Not a Go-Go Stock Recently
It has been a tough time to own GoPro stock. Shares are now down 60% for the year and are down 71% from their 52-week high set last November.
Even in just the last few months GoPro seems to have been punished harder than the broader markets. Consider that GoPro stock is down more than 60% since Aug. 10 alone.
Has the market given up on GoPro? Certainly that’s how it felt when I watched the stock fall more than 15% after declaring earnings last week, despite the company reporting 108.3% year-over-year EPS growth.
Whether you are sitting on a losing position and unsure of what to do next or you’ve been eyeing GoPro stock for some time, this may very well be the buying opportunity that we’ve been waiting for. If you’re willing to look beyond the current market pessimism I think you’ll find that the opportunity is quite promising.
The Next Catalyst
Think back to when you first started hearing about GoPro.
The context was, most likely, something to do with action sports. Surfing videos shot from the board itself; endless powder runs filmed from a skier’s own point of view; a camera mounted on an animal that gave us a never-before-seen perspective; the list goes on. GoPro found popularity with the sports enthusiasts who had never had a camera small enough or tough enough for the job.
Then the doors blew wide open. GoPro use by action sports enthusiasts led to GoPro use by action sports dabblers with $300-$400 to spend on a new toy. We started to see GoPro footage used in movies, commercials, television shows and more.
With the help of video-sharing services like YouTube, GoPro-shot clips that make the hair stand on the back of your neck became commonplace in our Facebook newsfeeds and YouTube highlight reels.
It seemed that GoPro cameras appeared out of nowhere and took over the consumer video camera market overnight. And I predict that it is about to happen again with virtual reality cameras.
Today, GoPro is growing earnings by triple-digits and is sitting at all-time lows.
Not only are we in a low-expectation environment created by weak earnings guidance, we’re also rapidly approaching the busy holiday shopping season and racing toward the virtual reality age.
The setup is perfect. Don’t give up on GoPro stock just yet.