GoPro, the maker of portable video cameras popular with extreme sports fans, sold its shares to initial investors late Wednesday, clearing the way for trading to start this morning under the symbol GPRO.
Shares of GoPro were sold to initial investors at $24 a share, says Renaissance Capital. That's at the high end of the expected price range of $21 to $24 a share. At the offering price, GoPro's selling of it stock to shareholders will generate proceeds of $427.2 million, based on the 17.8 million shares being sold. The company will command a market value of nearly $3 billion, based on the 123.1 million shares that will be outstanding after the deal.
GoPro makes a line of cameras that shoot high-definition video. They're popular with extreme-sports enthusiasts who, for example, strap them to their heads while skateboarding or to the ends of surfboards to capture and share their experiences. The company generated nearly $1 billion in revenue in 2013.
The company is also profitable. It generated net income of $60.6 million in 2013, roughly double the profit earned in 2012. It has sold more than 8.5 million cameras since its first product was introduced in July 2009.
Investors hope GoPro isn't the latest fad to sell shares to the public just as the popularity of its product is about to wane. There's concern about the fact that the company's first-quarter 2014 revenue fell 8% to $235.7 million. Profit during the first quarter fell 55% to 8 cents a share. Such declines, just before going public, is a startling sign.
Some investors might also remember the last video-camera craze: Pure Digital's Flip Video cameras were popular in 2009 when the company was bought by Cisco Systems for nearly $600 million in stock. Cisco essentially stopped selling Flip cameras by April 2011.
Nonetheless, strong brand awareness and an investing public that is craving risky stocks will likely allow shares to gain on their first day, says Francis Gaskins of Equities.com. But questions remain if the company can fend off competition from the established camera makers.
Gregory Bull, AP