GoPro’s Unexpected Fall in Share Price After 4Q Result Announcement
GoPro announced its fourth quarter earnings report which turned out to be better than what the analysts had expected. What completely took the financial analysts by surprise was that GoPro’s 4Q earnings report beat the estimates of revenue and earnings both, giving a report of $634 million for the quarter. The report was announced to the public after the stock market closed.
The earnings per share (EPS) came at a 99 cents when actually the expected EPS was 73 cents. This increase in the EPS was seen at a rate of 33%. According to GoPro Inc (NASDAQ:GPRO) the expected EPS was to come at 66 to 68 cents and the actual results overjoyed the company.
The revenue generated in the 4Q saw a 75% increment year-over-year, which was observed as a great accession towards successful sales.
The sales made in the holiday season is said to be the reason behind such high sales revenue report. While the analysts had just estimated an amount of $582 million from the 4Q sales, the actual outcome that came at $634million pleasantly surprised the GoPro team.
In the end of 2014, the management of the car making company announced that they have cash and cash equivalents at around $422 million dollars which will be a result in $200 million increment in the quarter earnings.
On the other hand, the high demand for company’s Hero 4 camera is seen to be the result of such high sales in the fourth quarter. GoPro also saw an eminent increase in GoPro apps and GoPro Studio downloads in the last quarter of the year 2014. According to Wall Street, GoPro shipped a total of 2.4 million cameras in the holiday season of the last quarter which gave a grand boost to the sales.
The above mentioned news of the GoPro’s quarterly earnings report came as a delightful present to the GoPro team. But what cannot be ignored is that the next day after the announcement of the report, the share price of the company started to fluctuate with a 30% increase at one point and very suddenly coming off at a 30% decrease. The investors could not fully comprehend why such a sudden and unexpected change would occur in value of the shares.
According to the financial analysts, what could be the reason behind this decline is that GoPro doesn’t give year-over-year guidance like the other companies but only gives quarter-over-quarter guidance, which makes the investors feel like they do not know what to expect. This, however, could be because of the unforeseen internal issues that the company has been facing for some time.
