News Column

GoPro goes for gusto, rises almost 31%

June 26, 2014

By Matt Krantz, @mattkrantz, USA TODAY



Shares of GoPro shot up 30% early in their first day of trading Thursday, as investors snapped up shares of the maker of portable video cameras.

The stock gained $7.62 to $31.62 in midday trading as investors in the initial public offering bet that the stock still has upside despite initial shares being priced at the high end of the expected range. GoPro shares were sold to initial investors late Wednesday for $24. The initial expected price range was $21 to $24. The first trade of the day was for $28.65. It closed at $31.34, up $7.34, or almost 31%.

"There was definitely upside," says William Preston of Renaissance Capital. "You just don't see big (consumer devices companies) with the growth profile of a GoPro." Investors were expecting a warm first-day reception since the stock's initial price was set below that of its other peers in the branded consumer devices industry, Preston says.

GoPro got an early lead in the niche market of selling small, portable video cameras that can be affixed to moving objects previously difficult to record. Extreme sports enthusiasts, for instance, can attach the cameras to their helmets to show off their daring feats on social-media sites.

There's a danger that larger camera makers could take notice of the niche and enter with competitive offerings. But for now, investors are seeing the positives and hoping there's more upside.

After GoPro's deal, there have been 143 IPOs so far this year, says Renaissance Capital. That's a powerful 59% increase from the number of IPOs during the same time frame in 2013.

IPOs have been seeing strong reception. The average first-day gain of IPOs this year is 14%, says Renaissance. Overall, IPOs this year have jumped 20% from their first-day prices, on average.

Longer-term, though, hasn't been as rosy. Many IPOs have been fading. The Renaissance IPO exchange-traded fund (IPO), a basket that tracks the performance of IPOs over the past two years, is up 3.6% this year, trailing the Standard & Poor's 500's nearly 7% gain.

Whether GoPro's shares can keep moving higher now that the valuation has caught up with the industry is the question, Preston says. Its future hinges on its plan to build a media business that sells products, and licenses and sells advertising against videos created with GoPro cameras owned by the company, Preston says.


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Source: USA Today


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