Shares of portable video camera maker GoPro, Inc. (GPRO) plunged almost 10% yesterday, following reports of it being allegedly responsible for the ace Formula One winner Michael Schumacher’s accident.
In Dec 2013, the seven-time Formula One champion met with a life-threatening accident while skiing in the French Alps, which lead to contusions along with hemorrhage in the brain.
According to Bloomberg reports, Schumacher’s son accused the GoPro camera for the accident that was mounted on his father’s helmet at the time of skiing. This has raised serious questions about the safety of GoPro cameras.
GoPro has always been in the news for its stock price volatility brought about by the frequent recommendation changes made by analysts, although this time the reason is grave. To date, though there has been criticism on its limited scope for differentiation and constantly intensifying competition, questions on its product safety have never been raised.
This, in all probability, is the third major share decline (since its IPO in Jun 2014) for the company after the recent 4.2% drop witnessed after an analyst at Piper Jaffray downgraded the company’s rating from Outperform to Neutral. The first decline was however the 15% one faced by the company in Aug 2014 owing to lack of clarity about the revenue potential of its video offerings and share price volatility.
GoPro has had quite a bumpy ride since its listing on Nasdaq. Although the company’s business seems to have good potential, the price volatility of this Zacks Rank #3 (Hold) company is a major concern.
Some better-ranked companies in the audio/video products segment include Skullcandy, Inc. (SKUL), Vuzix Corporation (VUZI) and Alps Electric Co. Ltd. (APELY), all of which sport a Zacks Rank #1 (Strong Buy).
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