GoPro Entertaining Acquisition Offers...If Anyone Wants It

GoPro Entertaining Acquisition Offers...If Anyone Wants It

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?

Image courtesy of Jim Macos (license).

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26 Comments

Simon Patterson's picture

Well if they start throwing gopros out for next to nothing, I'd buy one...

Simon Anderson's picture

GoPro's are a great product but they are another Goliath company like some of the big flash brands who have succumb to the cheaper knock off brands who are actually making extremely high quality products for much less.
The days of big brands charging us the earth for their massive profits are over and they need to be worried as some of the big manufactures are falling, and it shows how much profit they make if they can just wipe $100 off a product.
This isn't great news for the greedy companies but a competitive market is great for us consumers, especially us amateurs who don't have loads of cash to throw about.
The job losses is the biggest downfall.

Reginald Walton's picture

Well that's all fine and dandy to want low prices for top end gear, but you do realize that higher paying wage earners become the victims and eventually we end up with cheaper and cheaper labor. Meaning at some point it become a trickle down effect. Meaning those of us who do earn higher wages will earn less and less because the competition (copy-cats) force the OEM to lower their prices and in turn lower their workforce.

Simon Anderson's picture

Of course I want low prices, who doesn't If I knew the extortionate prices was to subsidise reasonable wages then yeah I'm all for it but unfortunately the extortionate prices are to fuel multi million pound profits for the few at the top, as stated in the post at the top near 40% gross profit, I bet that doesn't go to the employees.
Still I may be wrong and GoPro and other high end branded companies might pay their employees 3 times the national average, if I'm wrong I'll be the first to say sorry.
In the mean time until I'm proven wrong I'll keep buying the cheaper versions that do the same thing :-)

That's true in almost ALL sectors except for electronics.

Lane Shurtleff's picture

Those "high quality products" you speak of are a direct result of a company like GoPro putting in the engineering and capital to make a great product, for the damn Chinese to reverse engineer, contact the manufacture of say the weatherproof cases and internals being made by a third party supplier and undercut everyone. Photographers in their ever longing desire for "everything is too damn expensive" just create this problem.

Simon Anderson's picture

I totally agree with you and we owe a lot to companies like GoPro for their innovation and bringing amazing products to the market, but surely once they recoup those initial costs the price of these products should drop to reasonable levels, because they don't drop the prices for their 40% profit margin they allow the Chinese knock off companies to come in and deliver the same product for less who are working on smaller profit margins, also I do understand they probably pay extremely low wages as well, still if these big companies dropped their prices for a smaller profit margin it would be harder for Chinese knock off companies to start up and create slave labour as people would stick with a known brand.
And the Photographers in their ever longing desire for "everything is too damn expensive" I just don't want to be ripped off, and to be able to have access to great products like everyone else, and competition in industry is what keeps the goliath companies greed from being even higher.

Vincent Alongi's picture

Echo the sentiment about loss of jobs... it's an unfortunate situation, and having been through that multiple times I have empathy for their staff. Here's hoping there's a salvageable scenario at play behind the scenes.

Daniel Haußmann's picture

I have two GoPros (Hero 3 & 4). I only use them for mounting it in a car or on an Inspire drone for some behind the scenes.

Mainly I dislike the fisheye effect in full 4K resolution. I never liked the look. It looks unprofessional. I do not see any need to buy a new one. Even if both would fail, I would not miss anything.

Michael Kormos's picture

I'm also entertaining acquisition offers, for my Hero4 Black Edition with a case full of accessories, which I've used exactly once in the last three years :-/

Mark Holtze's picture

Their stock yesterday recovered a bit from that initial -25% fall..but ya this is bad news I guess for their share holders....until a company buys them up anyway.

I wonder if now is the time I should be buying GoPro stock or is it doomed?

Mark Holtze's picture

It's a tough call at this point. Usually buyout rumours don't play out well, Twitter hit a very shot high last year on buyout rumours and a lot of "retail traders" got burned big time when the stock collapsed after all suitors "bailed". It took a year to dig out of that hole but it recently hit it's 52 week high allowing people to get out. Based on that play, I'm staying away. Buyout rumours always play stock havoc and the best company acquisitions are done BEHIND the scenes without any public knowledge of a buyout. It's a risk so ya...so hard to say and investment advice for others is a bad path.

Feels a bit like RED or BLACK roulette moment right now.

I bought into Kodak when it was going bankrupt... Lost everything.

Mark Holtze's picture

oh GOD! I'm sorry! I love Kodak film and have been buying some up lately for my Super 8mm Canon 814az (DOPE CAMERA). You read anything about that Kodak super8mm they're going to sell for $3000? I was interested until I heard the price. You can buy a vintage super 8 in mint for $250 ... cost of film and digital transfers are enough of a burden.

This sounds corny AF, but my mom always said the "best investment is the one you make in yourself"...i've made WAY more money that way than through the stock market, but maybe i'm doing it wrong! ;)

Why now I only invest with fundamentals in mind. After a big market crash I might put a good chunk into some AAA stocks, historically that's seemed to work out well in very short periods of time ;).

Anyway are we a photographer community or an investment one? ;) Good discussion Lee, thanks for engaging.

Sounds like you should invest in indexed funds and forget about trying to beat the game... ;)

Mark Holtze's picture

I’m invested in index as well. But I have an aggressive smaller amount I play with. Where I make choices and not some algo.

Gabrielle Colton's picture

I feel like it's doomed unless they're planning on coming up with something revolutionary

Gabrielle Colton's picture

Really interesting. I have one but honestly don't use it much because I find it annoying to work. I feel like everyone who wanted one, got one and moved on or is not interested in upgrading etc. There are so many other action cameras being sold now from other companies at lower prices

Mark Holtze's picture

I’m watching as wel, the 5 year chart isn’t favourable at all. It will never go back to its hay day, like twitter (unless it gets bought) or Blackberry, but there is money to be made if you are calculated and strategic. Of course money could equally be lost, it’s a high mainstnece investment at this point.

Usman Dawood's picture

Not only that but their cameras properly suck now, it’s like they’re the knock off brand in every way but the price.

The hero 6 has horrible noisy footage, lots of crashes and glitches. Battery life was much worse, and speed of transferring files took a lifetime in comparison. Bought the 6, hated and then got rid of it.

Then we have the Karma lol.

Chris Lonsberry's picture

For what it's worth.. I took my several year old Hero3+ and my Hero6, charged both batteries and let them sit. The Hero3 died 15 minutes before the Hero6, which took about 2 hours. Granted.. wireless was turned off and I didn't have the screen on constantly. Should the Hero6 have been a marked improvement? Probably. But I would have described it as "slightly better" rather than "much worse".

Usman Dawood's picture

I should clarify, I meant vs the competition and maybe the Hero5

Christian Santiago's picture

GoPro is in a tough place. Their action cams are good products, but the competition in the consumer market is too saturated with lower-priced alternatives, and consumers don't care about advanced features they might not even understand. They're simply too expensive for that market.

On the flip side, there isn't much demand for these products from the pros either, since they're still extremely limited cameras whose use is reserved for crash cams, BTS stuff, and when you need to shove a camera in a tight spot. All very useful applications for sure, but really necessary and considering that you can get much better cameras like a panasonic g7 for a bit more, it makes GoPros not really a priority for that market either. And in general, entry-level DSLRS are just so good nowadays it almost feels like a waste of money to buy a gopro, especially when there aren't really any real dramatic improvements from one model to the next.

I think they'd be better off condensing their focus and creating a better eco system for their cameras. Maybe interchangeable lenses, etc to give content creators more creative options.

Sean Gold's picture

I bought the Hero4 Silver edition a few years back and I love it! My main issue was the price, I'd love to buy a new one and upgrade, but it's hard to justify 499 or even 399 for one when I could buy say a mirrorless camera for just a tad more. Though I do believe GoPro is the best at what they do. I haven't seen any knock off action cams that come close to the quality of GoPro footage. But one thing I'll never get, is why it took them until the Hero5 to allow RAW images? My phone shot RAW before my GoPro, what's up with that?

Chris Lonsberry's picture

I bought my Hero3+ to use on the motorcycle. The Harley vibrates like a.. big.. metal.. vibrating.. thing and there were only a few places on the bike that I could even try to call "stable" mounts. I used it and didn't even try to hide the action camera look of it. But there were ease of use issues that anyone who had the older Heros can understand. And I didn't want to use a BUNCH of video with that look. So I used the Hero3+ less and less.

When the Hero6 Black came out, I decided I had skipped enough small revisions and it was time for an upgrade. I think the image stabilization is the best thing since the wheel. (I hear it's better than the Hero5). I can not only mount it almost anyhere on the bike and have smooth video, I can go over a speed bump and it's barely noticeable. Having the screen right on the back has changed my life. Time lapse right to video is awesome.

There are still some problems. Low light was really noisy but I believe they're trying to patch that up in software. I have a massive problem with trying to turn the camera off and really only changing modes. The next time I think I'm getting a video, I'm really taking a photo. I've emailed them and suggested an easy fix. We'll see. It's kind of a black art to turn it off sometimes. I've heard stories of the Hero6 locking up but it's never happened to me. There are probably other problems with it but.. considering it's a tiny camera, it's really quite amazing. I've started using it more for vlogging.. just because it's so convenient. A bigger sensor would always be nice. (Ha.. maybe a GoPro Pro?)

I was outside a hockey game the other day and dropped the Hero6. The people I was with gasped and I reassured them, [insert black and white, cheasy music and completely overacted smile.. close up product placement...] "No worries. It's a GoPro!"

The GoPro software is a pain point. And when it comes to drones, I wouldn't even consider GoPro if DJI is around. Drones are what they do.. just as action cameras are what GoPro does. I understand diversifying your lineup but.. not sure that worked out. If anyone were to aqcuire GoPro, I think DJI would be my choice. (Maybe Cisco Systems is ready for another swing at the camera market??)

I'm not sure where they innovate next. Does it become a specs race now? You can drop prices.. but only so far. If it was $300, would I buy one or two more? Yeah, probably. Some killer signal to noise algorithm? That's everyone's Holy Grail. Ooohh.. how about an attachment that puts a screen over the top to make it easier for vloggers?

I don't have an answer for the knockoffs. If I find one, I'll make my own billion. But the GoPro camera is pretty amazing for being what it is. It's small. It's rugged. It has a great ecosystem of mounts and accessories. (Althought.. come on! $50 for a mic adapter??) It would be a shame for a company to tank with a great product in hand.