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Why Is GoPro (GPRO) Down 22.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for GoPro (GPRO - Free Report) . Shares have lost about 22.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is GoPro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

GoPro’s Q4 Earnings Match Estimates, Revenues Decline Y/Y

GoPro reported lackluster fourth-quarter 2020 results, wherein the top line missed the Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income in the December quarter was $44.4 million or 28 cents per share compared with $95.8 million or 65 cents per share in the prior-year quarter. The deterioration mainly resulted from lower operating income and higher income tax.  

In 2020, net loss was $66.8 million or loss of 45 cents per share compared with net loss of $14.6 million or loss of 10 cents per share in 2019.

Quarterly non-GAAP net income came in at $61.1 million or 39 cents per share compared with $102.5 million or 70 cents per share in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate.

Revenues

Quarterly revenues were $357.8 million, down 32.3% year over year. The decline was a result of lower sales across geographies due to the pandemic. The top line missed the consensus estimate of $376 million.

In 2020, revenues declined 25.3% year over year to $891.9 million.

Other Quarterly Details

Gross profit was $136.1 million, down 32.6% year over year. Total operating expenses were $80.7 million compared with $105.7 million in the year-ago quarter. Operating income came in at $55.4 million, down 42.4%.

GoPro has shifted its focus to a more subscription-centric, consumer-direct business model. It ended 2020 with 761,000 subscribers, which was up 145% year over year. Camera unit sell-through was more than 3.6 million in 2020.

Cash Flow & Liquidity

In 2020, GoPro generated $93.8 million of net cash from operations against cash utilization of $24.4 million in 2019.

As of Dec 31, 2020, the company had $325.7 million in cash and cash equivalents with $218.2 million of long-term debt compared with a respective $150.3 million and $148.8 million a year ago.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 75.93% due to these changes.

VGM Scores

Currently, GoPro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

GoPro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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