What Happened?
Shares of action camera company GoPro (NASDAQ:GPRO) fell 10.3% in the morning session after investor sentiment shifted back to the company's weak fundamentals following a recent, short-lived meme-stock rally. The decline followed a significant, speculative rally in the prior week that was largely attributed to the stock's status as a "meme stock" rather than any positive business developments. Once the short-term enthusiasm faded, investor focus appeared to shift back to the company's challenging financial situation. Reports highlighted GoPro's weak fundamentals, including declining revenues, shrinking gross margins, and negative profitability metrics like EBITDA. Concerns were also raised about a drop in subscribers, which undermined the company's pivot to a recurring revenue model and brought its long-term financial health and liquidity into question.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy GoPro? Access our full analysis report here, it’s free.
What Is The Market Telling Us
GoPro’s shares are extremely volatile and have had 58 moves greater than 5% over the last year. But moves this big are rare even for GoPro and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 6.6% as recent speculative rally, fueled by its newfound status as a 'meme stock,' appeared to lose momentum. This decline followed a period of intense volatility for the action-camera maker. The stock had been labeled a 'meme stock'—a term for shares that gained popularity with retail investors, leading to price movements often disconnected from a company's financial performance. In the days prior, GoPro's stock had surged by as much as 98% in just four trading days, a rally that occurred without any positive company-specific news. Reports noted this frenzy had pushed the stock into 'overbought' territory, signaling a potential pullback was likely as the speculative momentum waned. This volatility stood in contrast to the company's underlying business challenges, including a history of declining revenues.
GoPro is up 19.5% since the beginning of the year, but at $1.32 per share, it is still trading 20.3% below its 52-week high of $1.65 from November 2024. Investors who bought $1,000 worth of GoPro’s shares 5 years ago would now be looking at an investment worth $251.92.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.