GoPro (GPRO, Financial) has been tumbling for almost two years now as the stock has failed to live up to its expectations.
Throughout the past three quarters, GoPro’s revenue has been declining sharply by an average of over 40%. This is because the company has been facing several major problems mainly due to the slumping demand for its action cameras as various trivial players have entered in this segment with better and cheaper offerings.
GoPro, after a long wait, recently launched its first new drone, Karma. It is well known that GoPro delayed the launch of Karma, but it looks like it was not worth delaying as it lacks some important features such as Follow Me.
However, it still has some good features that can attract customers. Just a few weeks after the Karma launch, drone market leader DJI Innovations introduced its new Mavic Pro drone. DJI’s new drone is better than Karma in many aspects, especially when it comes to flying.
Moreover, Mavic Pro has two important features: obstacle avoidance as well as follow-me mode. It also comprises a range of 4.3 miles with a flying time of 27 minutes compared to just 20 minutes of Karma. Before the launch of Mavic Pro, Karma was the most compact drone, but now that has changed as Mavic Pro is smaller and more compact.
On the other hand, the weight of DJI’s Mavic Pro is approximately 730 grams compared to the Karma’s weight of slightly more than 1 kilogram. Apart from this, the Mavic Pro can achieve a flying speed of 65 kph in sport mode whereas Karma can achieve a maximum flying speed of 56.3 kph.
However, GoPro’s Karma has one advantage over DJI’s Mavic Pro. Its camera can be attached/detached from Karma whereas Mavic has a built-in camera. As a result, it is easy for users to carry only the camera instead of carrying the entire drone.
Conclusion
While GoPro has been trying hard to curb its falling sales, the competition in its core markets has been increasing consistently as well. Despite the launch of the new Karma drone, GoPro doesn't have much upside to offer from current levels. GoPro will find it difficult to compete against the market giants like DJI which command a leading market share. GoPro is a sell at these levels.
Disclosure: I don't hold a position in the stocks mentioned in the article.
Start a free seven-day trial of Premium Membership to GuruFocus.
