GoPro is trading at a dismal 6.5 percent of its $98.47 all-time high. It had dropped even more following a disappointing earnings call that announced lower-than-expected performance and upcoming layoffs, but before an unnamed source shared news with CNBC of GoPro's request to JP Morgan to help it find a buyer several months ago. With its inability to turn sales around, it's not a surprise GoPro is looking for a way out. But who would want the company? GoPro CEO Nick Woodman seems to think Facebook might.
In a subsequent interview with Bloomberg, Woodman denied the CNBC report that GoPro was seeking an acquisition. Flat-out lying to the public about such important news in place of a "no comment" would be an odd move for a CEO of any company, so the specifics of what was exactly asked might be inaccurate. But Woodman left more room for consideration of an offer in his full response to questions about the acquisition rumors:
...we have not engaged [JP Morgan] to help us sell the company, and...with that said, if there were an opportunity for GoPro to partner up with a larger organization that could help us scale the company — scale our brand and our reach to consumers — then that's certainly something that we would consider. But it's not something that we're actively engaged in at the moment."
Okay, so GoPro isn't "actively" engaged in seeking acquisition offers at the moment. Adding a modifier that could be subjectively interpreted is a nice way to weasel around the potential truth, but the question remains: Who would want GoPro?
While GoPro's brand is far from unrecognizable (it does have great social awareness and action-sports-community presence), GoPro isn't known specifically for its intellectual property, world-dominating proprietary hardware platform, or any other concrete market edge, which is part of its current financial problem. It was first to market with a new, well-made product category that filled a major void. But it's done little to expand since. Despite some CEO-standard vagueness, Woodman didn't leave us hanging too much.
Again, in response to a question about who GoPro would be interested in working with, Woodman comments:
GoPro is a very social company, and we have one of the strongest brands in the world that is very well-regarded for our ability to help people capture and share their active lifestyles. And so, we're primarily focused on spreading our brand...and our hardware and software solutions to reach as many consumers around the world as possible. So to us, scale is very important."
While companies like Snapchat might be interested in GoPro's younger, active audience of consumers, not everyone has the cash to make GoPro an easy purchase at nearly $900 million. With hardware companies scrambling to get into software and content creation (including GoPro's own software services) and software companies scrambling to get into hardware (think Snapchat Spectacles and Google Glass), Woodman may as well have come out and asked one company for a little consideration. One company does reach more consumers around the world than any other contender. And they just might appreciate that "GoPro is a very social company" and helps "people capture and share their active lifestyles," which are all the rage. Social company, active lifestyles, reach around the world — Google's bots are dying to tell you Facebook tops that keyword-loaded list.
Such a move wouldn't be entirely absurd from the standpoint that competition in the online video space is fierce at the moment: YouTube, Facebook Live, Vimeo, Instagram, and Snapchat are all in an interwoven mesh of hands scrambling to stay on top of the live video event, vlog, and mega-influencer games. But aside from the cost being affordable to a company with deep pockets, the benefits still have to be worth it. It's hard to see how Facebook needs to spend nearly $1 billion for what little GoPro could offer. Facebook's customers already have the device they use for all of their video content, and those are getting better every day. There's no way Facebook is going to compete with the iPhone or randomly dive into the oversaturated market of which action cameras have become a part.
DJI is another potential contender. The most popular drone company in the world is killing it. But that's the point. From cameras to drones, they, too, are clearly doing a good enough job of playing the everything-they-do-we-can-do-better game. Yesterday, GoPro's Karma pull-out proved that much yet again. DJI needn't lift more than a finger or two to develop a great action camera should they decide the market isn't yet oversaturated with them.
One could expect Apple's laser focus on acquiring what it can't do better on its own as well as its outrageously expensive Beats deal would keep it away from saving the ill-fated, downward-spiraling GoPro from catastrophe. And if even the billion-dollar drop in Apple's soon-to-be-cash-repatriation-filling bucket is too much for the company, it's clear that the money isn't really the issue. GoPro itself is the issue.
And still, that's not exactly fair to say. GoPro isn't completely out of hope. After slashing prices of their popular action cameras by $100, Woodman shared that the company saw two to three times the sales and lamented not making the decision in time for the holiday season, during which consumers did not show excitement over paying the same price for a year-old product. With a near-40-percent gross profit margin, GoPro had the room for the price drop for quite some time. Finally taking advantage of it will give it one last chance to prove if the recent failings of the company can be turned around with a fairer price for the consumer.
At the end of the day, though, Woodman is right. Short of another price drop and in a world of dozens of well-performing, cheap GoPro-knockoffs, GoPro's main attraction is its social status in the perhaps saturated, but dedicated, market of action sports. If a company thinks it's ready to take on the world and make GoPro the Red Bull of action sports video coverage, there could be a small glimmer of hope after all. But it would be the turnaround of the decade.
Are you a GoPro customer or fan? What would get you to stay with GoPro, or what pushed or pulled you away?