BNL Finance is the furthest thing from a GoPro Inc (NASDAQ:GPRO) cheerleader. Fact is GPRO stock has consistently ranked toward the bottom echelon of stocks in our coverage universe. We believe GoPro stock is well deserving of its 50% loss over the last year, and its 90% loss from 2014 high.
Nonetheless, the question is not whether we like GoPro’s business, or believe it is sustainable over the next decade. The question is will GPRO stock trade higher in 2017? Quite frankly, it is more likely than not. Here’s why.
The only thing that matters to Wall Street is year-over-year growth, and a company’s revenue run-rate outlook. For a security like GPRO stock that is significantly oversold and trades at 1x sales, it is already cheap. Therefore, it does not matter that GoPro Inc is on pace for revenue losses of more than 20% this year, and that it is hoping and praying to hit non-GAAP profits in 2017 after massive restructuring.
What resonates with investors in an oversold, cheap stock is growth. And GoPro is expected to grow revenue 18% next year. Of course, another big question is will they?
This is a company that delayed product launches and has been plagued by recalls. However, it will have new products in 2017 for GoPro enthusiasts and its drone business has an opportunity to be impactful. Given that camera unit sales were up more than 33% year-over-year during the Thanksgiving to Cyber Monday period, we can conclude that consumer demand appears strong headed into the new year.
In other words, GPRO stock is likely going significantly higher in 2017.
How high will GPRO stock go?