Thursday wearable camera maker GoPro (Nasdaq: GPRO) made its debut on the Nasdaq stock exchange. The GoPro IPO is one of the more anticipated IPOs of the year, along with the Alibaba IPO.
The company’s executives were exuberant and took live-streamed video and photo “selfies” with pole-mounted GoPro cameras as they rang Nasdaq’s opening bell.
After the GoPro IPO priced at $24 per share, the stock closed up over 30%. Friday the stock surged even further, up over 14% to trade around $35.75 per share.
Investors that got in at the GoPro IPO price of $24 are already sitting on a 50% gain.
GoPro’s business model is pretty simple.
The company makes high resolution, durable and wearable action cameras. You can use them to make a time-lapse video, record your first skydiving experience, film a music video and so much more. It’s the durability and versatility that makes the cameras perfect for so many applications.
At home in Colorado I saw an incredible amount of GoPro cameras mounted to helmets this ski season, a rapidly emerging trend across all action sports. With options for mounting cameras to just about anything, unique camera angles are just one of many selling points for GoPro.
My perception of GoPro’s explosion in popularity isn’t just anecdotal. Take a look at the chart below which illustrates GoPro’s sales over the past four years.
From 2012 to 2013 GoPro nearly doubled both its profit and its revenue.
Despite GoPro’s success, the overall market for cameras is in a state of decline. As the global smartphone market skyrockets, the global camera market continues its downward spiral.
Even in the face of a decline in the global camera market, GoPro seems to have carved out and dominated the niche market for wearable and mountable action cameras. During this period major players have tried and failed to capture the market for small and wearable video cameras, as was the case with the now-discontinued line of Flip Video cameras made by Cisco (Nasdaq: CSCO).
And with increasing picture quality, GoPro cameras are even replacing the need for cumbersome and expensive camera gear for music video and television producers.
The newest GoPro, the Hero 3+ Black Edition, offers Ultra HD 4k recording format, significantly higher resolution than today’s gold standard of 1080p.
It remains to be seen whether the GoPro IPO success is yet another unwarranted IPO pop or whether this is the beginning of sustained success for the company.
One thing is certain, GoPro is dominating action sports and the adrenaline junkies that enjoy them.
The company has real sales, real products and real growth. Its products are beloved by those who use them. As videos shot with GoPro cameras move beyond action sports and into every day life, popular exposure to the brand is increasing rapidly.
One of the things that makes the company so successful is that, with a wide array of mounts available, many GoPro enthusiasts own more than one camera. Type “GoPro” into Google‘s (Nasdaq: GOOGL) Youtube search bar and you’ll find countless videos of action sports filmed by amateurs using multiple cameras for multiple angles.
In the A-51 terrain park of Colorado’s Keystone Resort it was not uncommon to see snowboarders and skiers with two helmet mounted cameras, a pole mounted camera and a friend following behind with yet another pole-mounted camera.
Besides the tremendous opportunity in hardware, GoPro is already beginning to branch into content. Considering this has been a winning strategy for companies like Netflix (Nasdaq: NFLX) and Amazon (Nasdaq: AMZN), I consider this to be a logical and promising next step for the company.
If you missed the GoPro IPO I wouldn’t advise buying the stock here after it has popped around 50%. But this is certainly a company on the move and one that we’ll be hearing about for a long time to come. I’d like to see the company present a cohesive strategy for monetizing content and a reasonable PE ratio, but this is certainly a company I’d like to own at some point.
Jay Taylor personally owns shares of Amazon.
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