GoPro stock price staged a strong recovery this week as it became a favorite name among meme investors. It jumped by over 40% on Tuesday, reaching its highest level since November 13 last year. It has surged by over 245% from the year-to-date low, giving it a market capitalization of over $153 million.
Why the GoPro stock price surged
The GPRO share price has been in a strong bull run in the past few days as investors piled into highly shorted, struggling companies. In GoPro’s case, it has a short interest of almost 10% because of its weakness.
GoPro’s annual revenue has been in a strong downtrend, and the downtrend momentum will likely continue. It made over $801 million in 2024, down from $1 billion in 2023, $1.09 billion and $1.1 billion in the previous two years.
This trend is expected to continue this year, with analysts forecasting a 10% decline in revenue to $723 million. Its weakness is that it is primarily a one-product company.
The most recent results showed that GoPro’s revenue declined by 14% in the first quarter to $134 million. Its gross margin dropped from 34.1% to 32.1%, while its net loss improved to $46 million.
The company aims to enhance its business by introducing new products and reducing costs. For example, it recently launched an upgraded Max 360-degree action camera whose price has crashed to $249, down by $120 from its listing price.
GoPro’s subscription business remains under pressure, with its revenue rising slightly to $27 million. It ended the quarter with 2.47 million active subscriber, down by 1% from a year earlier.
GoPro has continued to cut its costs, which it hopes will make it more profitable in the future. In a statement on costs, the CEO said:
“We are pleased to report that the OPEX reduction work we began in 2024 is largely behind us, and is starting to yield improvements in our operating model. Operating expenses were down 26% to $62 million from $83 million in Q1 2024.”
The company is also working on improving its business by launching a motorcycle helmet camera that it hopes will accelerate its growth. While this is a good initiative, we believe that the helmet initiative will be a niche product.
GoPro stock price analysis
The GPRO stock price has jumped sharply this month as other meme companies like Kohls, Faraday Future, Children’s Place, Opendoor, and Tilray Brands did. History shows that these meme companies often surge and then retreat shortly afterwards.
The daily chart shows that the GoPro stock price has surged from a low of $0.40 in April this year to $1.40 today. It has moved to a high of $1.02, the highest swing on June 9 this year.
GoPro shares have become highly overbought, with the Relative Strength Index (RSI) and the Stochastic Oscillator moving to the extreme overbought points.
Therefore, the stock will likely pull back and possibly retest the support at $1.00. Such a move would signal a 26% drop below the current level.
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