Initial Public Offerings (IPO) continue to enjoy the favors of the market. The latest company to list its securities on a public exchange is GoPro, Inc. (GPRO), whose shares surged 30.6% ($7.34) to close at $31.34 on Jun 26, 2014. The portable video camera maker raised $427 million from the offering, much higher than its expectations. GoPro’s offering also marks the second largest IPO in Sillicon Valley, with the first IPO being that of Alibaba.
GoPro offered 17.8 million shares at $24.00 a piece, while the initial price target was in the range of $21.00 to $24.00 a share. However, the opening price at the beginning of the trading session was $28.65, which surged to close at $31.34. At the end of the session, the company had a market capitalization of over $3 million. GoPro plans to use the proceeds for clearing debts and also general corporate purposes.
The rally in GoPro’s shares reflects the growing demand for IPOs, particularly in technology and Internet-related sectors. Except King Digital (KING), the developer of Candy Crush Saga (which witnessed a drop of 16.0% in its first trading day), most IPOs from the sector have made satisfactory transactions in 2014.
GoPro offers small and portable video cameras that can be attached to moving objects or even people to capture minute details. These cameras are specially used by sportsmen or sky divers to capture intricate details of a sporting episode.
Based in San Mateo, CA, GoPro’s first product is the water proof camera which is presently available across 25,000 stores in the U.S. In 2009, the company started manufacturing high-definition cameras and has sold approximately 8.5 million units, of which about 3.8 million units were sold in 2013. The price of the camera ranges between $200 and $400.
This apart, GoPro sells accessories such as cases, battery packs and mounts that assist users in attaching cameras to surfboards, helmets or wrists. Additionally, the company offers a free app and software that helps edit, store and publish videos to social media accounts like Facebook (FB), Instagram, Twitter and YouTube.
GoPro has further plans of diversifying into a media company by selling videos captured by its cameras. According to its filing, GoPro’s videos had fetched 50 million hours of viewership in 2013, which can be monetized to generate additional revenue as camera sales growth rates moderate. The company has already created a GoPro channel for Microsoft's (MSFT) Xbox and similar arrangements for Youtube and Virgin America are apparently in the works. If the strategy takes off, GoPro would be in a good position to garner advertising revenues.
GoPro enjoys a first mover’s advantage in the high definition portable cameras market. The company’s strong portfolio of cameras helps it counter intensifying competition from new entrants like Samsung and Sony Corp. (SNE).
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