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GoPro (GoPro (GPRO)) shares are having a moment. The action camera maker reported first-quarter earnings after the bell on Monday, and while the numbers were mixed, investors are cheering two things: revenue that crushed expectations, and a strategic review that could lead to a sale or merger.
Let's break it down.
GoPro's Q1 revenue came in at $99.07 million, down 26% from a year ago but well above the Street consensus of $69.92 million. That's the kind of beat that gets attention. Hardware revenue was $72.15 million, down 32.8% year-over-year, while subscription and service revenue edged up 0.1% to $26.92 million.
The bad news? The company reported a loss of $0.35 per share, missing the consensus estimate of a $0.04 loss. That's a big miss, but the market seems focused on the revenue beat and the bigger picture.
CFO Brian Tratt struck an optimistic tone: "In Q1, revenue of $99 million was within guidance. We made meaningful progress on key metrics — cash used in operations improved $21 million year-over-year to $37 million, operating expenses declined year-over-year, and we continued to reduce both owned and channel inventory sequentially and year-over-year."
GoPro also highlighted its new MISSION 1 series of cameras, which it says puts the company at the high end of the digital imaging market. CEO Nicholas Woodman called MISSION 1 "the boldest step for the company in the professional imaging space."
Here's the part that's really moving the stock. GoPro announced that its board of directors is conducting a strategic review of alternatives, which could include a sale or merger. This comes after the company has been diversifying into defense and aerospace in recent months — a pivot that seems to have attracted attention.
"There is significant unrealized value in GoPro's technology, IP and brand, value we are committed to realizing on behalf of our shareholders," Woodman said.
The board will work with independent financial and legal advisors on the process. And here's the kicker: GoPro says it has already received "several unsolicited inbound strategic inquiries" since announcing its defense and aerospace consulting engagement with Oliver Wyman in April.
"Over the past 24 years, GoPro has developed significant technology, IP, and brand assets along with world-class product development and scaled manufacturing capabilities," Woodman added. "We are excited to work with our advisors to evaluate potential opportunities in various sectors to maximize shareholder value."
No timetable has been set, and the company says it won't comment further until disclosure is appropriate or necessary. So we're in wait-and-see mode.
GoPro stock surged 21.97% in after-hours trading to $1.61. That's still a far cry from its 52-week high of $3.05, and it's above the low of $0.54. So while the pop is nice, the stock has a long way to go before it's back to glory days.
The strategic review adds a layer of uncertainty — and opportunity. Whether GoPro ends up being acquired, merges with another player, or goes in a different direction, the message from management is clear: they think the company is worth more than the market is giving it credit for. And with unsolicited interest already on the table, there's at least some evidence to back that up.
For now, investors are buying the story. We'll see where it goes from here.
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