Despite continued dedication among adrenaline junkies and adventure athletes, camera maker GoPro isn’t doing so hot. On Monday, the company’s stock fell 23 percent in early trading after it confirmed plans to lay off at least 250 employees (20 percent of its workforce) and shutter its drone division. Following weak revenue guidance for the fourth quarter of the fiscal year, CEO Nick Woodman also announced he’d be cutting his cash compensation to $1 for the upcoming year. Now, the company is even considering putting itself up for sale.
GoPro is turning to J.P. Morgan Chase, which underwrote its 2014 initial public offering, to help find a sale or partnership with another company, according to a report from CNBC. “If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at,” Woodman said.
The news is an about-face for the company, which in 2014 made its public debut as the biggest consumer electronics IPO in about 20 years. With a $2.96 billion valuation, the company raised $427 million in its IPO, solidifying its position as a popular product segment even as smartphones continued to decimate the camera industry at large. But the company has had a tumultuous time since then. After its stock briefly spiked in mid-2015, its performance declined, then flat-lined through 2017.
After its IPO, GoPro’s challenge was to transform itself from a successful camera seller into a major media entity. To kickstart those efforts, it launched an Xbox Live channel and made a deal with Virgin America for in-air entertainment. Its website also acted as a media portal, collecting top photos and videos. Then, amid our booming drone fixation, the company diversified its hardware offerings with the Karma drone in 2016. But the company had to recall the $799 drones that November, when it was discovered that the device could lose power during operation. While no injuries or damage was reported, GoPro lost $373 million that year.
Things looked up in 2017 thanks to the launch of the $499 Hero 6 Black camera in September, but the last few months of the year presented GoPro with a new challenge: Competition as major players like Google entered the wearable camera market. The Google Clips Camera is a $249 wireless smart camera that uses artificial intelligence to automatically capture several second motion clips when its algorithms detect something photo-worthy. Unlike GoPro cameras, which require dedicated mounts to affix to a helmet, bicycle, or body, Google’s camera is designed so you can clip it to your shirt, a stroller handle, or wherever else you might be able to clip something. While GoPro has a strong hold among adventurers and extreme sports enthusiasts, Google’s camera targeted the mainstream.
As its CEO has suggested, perhaps now is the time for a new chapter by teaming up with another company. GoPro already has a partnership with Red Bull, which as of 2016 hosted more than 1,800 events globally and began using GoPro exclusively in its point-of-view camera work. With their shared values and Red Bull’s growing revenue—it was the number one energy drink in the U.S. in 2016—perhaps it would make sense for the two brands to join forces in a bigger way, seeding GoPro with the media positioning it was never quite able to develop and offering Red Bull another revenue stream. As other camera makers bounce back following a five-year slump, perhaps a Canon, Sony, or Nikon could take interest in the action camera maker. And given its proximity on the San Francisco peninsula, perhaps San Mateo-based GoPro could also attract the attention of a company like Google in its expanding hardware efforts, too.
While its past few years have been troubled, GoPro is still a solid camera maker. Its high-quality cameras have a dedicated following, and new releases continue to post good sales. The company’s success just isn’t skyrocketing the way Wall Street expected. In abandoning its drone efforts and shrinking its staff, GoPro hopes to make itself profitable by mid-2018—largely by slimming its operating expenses. In doing this, the company is both sticking to its roots, and making itself more attractive to an outside offer. Time will tell if another company takes the bait.