Karma Will Once Again Be In The Limelight
But more than the earnings itself, investors must look out for the company’s 2017 guidance and its schedule for the Karma relaunch. The company had earlier said that it expects a double-digit YoY revenue growth in 2017. Analysts are modeling 17.7% growth in revenues. A strong outlook could send the stock soaring. The company has also said that it expects 2017 non-GAAP EPS to be positive. The company recently announced a restructuring plan which is likely to save around $650 million in non-GAAP operating expenses.
Investors will also be watching out for any information regarding the timeline for the Karma drone re-launch. GoPro stock had surged earlier in the month when the company had announced its plans to re-launch the Karma drone (2). However, the company hadn’t disclosed any details. There is a lot of hype and expectations from the Karma drone which is at the center of a bullish thesis around the stock. However, given the competition in this segment, the dominance of DJI and the negative baggage it carries due to the recall, the success of Karma drones are far from guaranteed.
GoPro Stock Presents An Opportunity For Enterprising Investors
The recall of Karma drones and the production issues at the beginning of the quarter has resulted in a strong bearish sentiment around the stock. GPRO remains a heavily shorted stock (3). In the latest reporting period, the total number of shorted shares came in at 33.35 million, a massive 35% of the total float, with days to cover around 10 days. While the short interest shows the bearish sentiment, it could also result in a short squeeze.
While GoPro Inc (NASDAQ:GPRO) stock continues to remain a risky bet, Q4 earnings provide an opportunity for risk seeking investors. Considering that GoPro stock is prone to wild swings, a strong 2017 outlook or positive commentary on Karma relaunch could send the shares higher. This upward movement could be further accentuated by a short squeeze. However, long term investors must wait till the earnings to get a better picture. If you are looking to invest in tech stocks which have better risk reward proposition than GoPro, have a look at our Top Tech Stock Picks which have consistently outperformed the market.
The article Should You Buy GoPro Inc (GPRO) Stock Going Into Q4 Earnings? originally appeared on amigobulls.com. Watch our analysis video on GPRO.
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Additional Links:
(2) https://techcrunch.com/2017/01/04/gopro-says-it-is-re-launching-the-karma-drone-this-year/
(3) http://www.wsj.com/mdc/public/page/2_3062-nasdaqshort-highlites.html
