GoPro Releases Strong Hardware Earnings, Reiterates Virtuous Cycle Of Sales Driven By Content

This is an excerpt from my article on Seeking Alpha.

Summary

  • Lofty valuations have been credited to hopes of content monetization.
  • During Q2 call, management pounded home the “content drives sales” mantra.
  • Sales and net income were solid but not amazing.
  • Headcount and job openings indicate continued growth.

One of the oft-cited reasons for GoPro’s (NASDAQ:GPRO) meteoric advance is the assumption and hope of institutional investors that the company, with a commanding social media footprint, will at some point start to create incremental revenue off of their customer’s videos. JMP Securities senior analyst Alex Guana (with a PT of $60, one of the highest on the Street) said early Thursday on CNBC,

“I think it’s already given that it’s a media play, what that value is, is undetermined. We think in internet advertising, that there is a $50 billion opportunity up for grabs this year. We think that the business model, as it exists today, can support a billion in revenue in terms of monetizing the content that they’ve already created.”

During the Q&A portion of the investor call Thursday afternoon, Jeremy David from Citigroup finally asked the question on everybody’s mind (at 35:35 on the playback), “I wanted to ask you about your media strategy in terms of incremental investments you might be doing to drive media revenue. . . . What sort of investments are you potentially looking at?”

Management’s response was as follows:

“In terms of priorities we are primarily focused on  . .  . 

For the full article, please visit here.

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