GoPro Plummets Following Another Poor Earnings Report

GoPro Inc fell by up to 14% after it posted a disappointing outlook for is sales during the current quarter. The outlook missed estimates by analysts and reflected the slow demand for its camera and its delayed launch of its drone.

Revenue for its first quarter is predicted to be between $190 million and $210 million. Analysts were expecting revenue to be $267.5 million. During the fourth quarter, sales increased by 24% to just over $540.5 million, and missed the average estimate of analysts that was set at $573.2 million.

The last several months have been quite hard for GoPro. The company was required to recall its drone during November. The Karma was recalled just two months after its debut had been much hyped, due to the problems with a battery after it led to some of them losing power during mid fight.

CEO Nick Woodman had bet that Karma and the Hero5 camera would revitalize the demand for its products and help its flagging stock price.

However, the problem with Karma added to a string of problems including delays in production for the drone and the new Hero5 that caused the company in November to lower its 2016 sales target.

The Karma is back on sale with limited shipments to start, but faces huge competition from manufacturers that have more experience such as SZ DJI Technology based in China.

The company has forecast gross margins for the first quarter that will be in the low-30% range, compared to analyst’s estimate of 40.5%.

Shares tumbled on Friday and bottomed out at $9.40, which was the biggest drop in the past three months. After peaking in October of 2014 at $93.85, GoPro stock has lurked below its price of its IPO since the latter part of 2015 of $24.

During the fourth quarter, the camera maker posted earnings excluding certain costs of just over $42.4 million following an $11.4 million loss one year earlier.

Adjusted per share earnings reached 29 cents per share, which was higher than the average estimate by analysts of 22 cents.

Charges during the quarter included a $102 million full value allowance on assets for deferred taxes and $37 million for restructuring.

GoPro, based in San Mateo, California, is transitioning as it pulled back its ambitious strategy of building its media company around GoPro videos.