GoPro Plans Jobs Cuts, Provides Weak Sales Outlook

Shares of GoPro plunged as much as 28% in after-hours trading after the wearable camera maker announced revenue forecasts below expectations.

GoPro said the preliminary take on the fourth quarter reflected lower than anticipated sales of its cameras and a price but of its Hero4 model in December.

GoPro has announced that it has reduced its workforce by 7 percent in an effort to “better align resources to key growth initiatives”. GoPro expects to report revenue of $435 million, while analysts were expecting the company to pull in $521 million or thereabouts in its fourth quarter.

Separately, recently, TheStreet Ratings objectively rated this stock according to its “risk-adjusted” total return prospect over a 12-month investment horizon. The high profile of the company wasn’t enough to ensure that growth continued, with the fourth quarter of 2015 resulting in fewer profits than expected.

It was small consolation that operating expenses came in a little bit lower than guidance, expected in the range of $150 million to $152.5 million in the fourth quarter. GoPro’s workforce had grown 50 per cent annually in the last two years to 1,500 by the end of 2015.

The main culprit was disappointing sales of the Hero4 Session, an ice-cubed sized camera it launched in July. Not only is this inventory being overvalued since GoPro hasn’t absorbed any charges related to the carrying value (it seems to have only recognized revenue reductions thus far), but there’s a lot of it. ING Groep now owns 7,957 shares of the company’s stock valued at $248,000 after buying an additional 2,100 shares during the period.

Preliminary financial results show GoPro is struggling, and a major downsize could be on the way.

The weak outlook from GoPro dragged down shares of Ambarella Inc., the company that makes image-processing chips for GoPro cameras.

The company also said veteran media and technology executive Zander Lurie resigned as senior vice president of GoPro Entertainment but will be joining the company’s board of directors.