GoPro (GPRO) shares plunged more than 13% Thursday after the company reported its latest quarterly earnings after the previous session's close, with revenue missing consensus estimates.
The action camera company reported fourth-quarter earnings per share of $0.02, in line with the analyst estimate of $0.02. However, revenue for the quarter came in at $295.42 million, down 8% year-on-year and well below the consensus estimate of $326.13 million.
The company said that its subscription and service revenue increased 13% year-over-year to $25 million, while its subscriber count ended Q4 at 2.5 million, up 12% year-over-year.
"Our growth strategy led to significant retail channel sell-through increases in the fourth quarter and second half of 2023," said Nicholas Woodman, GoPro's founder and CEO. He added that the company is now looking to activate more marketing initiatives to drive awareness and demand.
Reacting to the report, analysts at Wedbush downgraded the stock to Neutral, lowering the price target to $2 from $4, stating the next ten years of growth appears as precarious as the last.
"Prior sales growth targets appear unlikely in 2024 and possibly beyond, while margin expansion opportunities are limited," analysts wrote. "Given soft Q4 sales both domestically and in APAC, coupled with lower-than-expected Q1 guidance and 2024 subscription guidance, we no longer have confidence that GoPro can reach its prior growth targets. As a worst-case scenario, expanding retail doors could further cannibalize direct sales, eroding margins further without meaningfully expanding revenue."
Oppenheimer's analysts maintained a Perform rating on the stock. They said near-term inventory challenges drove the company's lower-than-expected Q1 guidance.
"Q1 revenues/EPS guidance of $145M/($0.25) was below consensus expectations of $193M/($0.14) due to channel inventory reductions and lower expected sell-through," said analysts. "We are encouraged by the company's margin expansion outlook and wider reach strategies but remain cautious about end-market demand recovery."