The biggest name in extreme sports cameras is set to become a publicly traded company. GoPro filed its S-1 with the SEC on Monday.
The company has come a long way in the last few years. I remember the first time I saw their product. I was at a resort in the Dominican Republic and a family that we started hanging out with had one on the trip. We used it to record awesome video footage on the beach, in the ocean and in the pool. So I'm not surprised that GoPro has gone on to build a powerful brand as the "go to" product for surfers, skiers, skydivers, cyclers, and pretty much anything where POV footage is fascinating to watch.
And now that the company's products include build-in Wi-Fi and offer free video editing apps and controllers for smartphones and tablets, they fit nicely into the Connectedly family of cool stuff.
The story of GoPro is as exciting as some of the footage that users capture. Founder Nick Woodman came up with the idea while on a surfing trip, and the first cameras hit the market in 2004. By 2012 revenue crossed half a billion dollars. In 2013 they sold almost one billion dollars of product. Profit-wise, they're doing pretty well too, having made about $61 million in net profit,. That's about a 6% net profit margin.
GoPro dominates the "action" segment of the camera market with 54% share according to IDC. I couldn't even tell you what the alternatives are to their product without doing some research. This goes to show just how strong their brand is.
But will the stock be worth buying? I think that's a bit more of a stretch. I don't know what the company's valuation will be set at when it goes public, but it's fair to say it will be high than the $2.25 billion valuation they had in 2012 when contract manufacturer Foxconn made a $200 million investment.
At $2.25 billion, even if the valuation hasn't changed, GoPro would be trading at 36 times last year's earnings. GoPro would need to deliver pretty strong growth over the next few years to justify a market value beyond this. That said, if sales have been doubling year-over-year for the last two years there is a pretty good chance that strong growth will continue. I'll admit it. I want one and I wouldn't even have much of a use for it. I just think it's an awesomely cool product and splicing in some footage from a GoPro would make family movies (staring the kids on a trampoline or swimming the lake) more fun.
To me it's all about the brand. The products themselves are nothing that any good consumer electronics company wouldn't be able to make. All of the big camera guys like Nikon, Canon and Sony could do this. But GoPro beat them to the punch and build a spectacular name in the niche. All the power to them. I hope they do well. When IPO pricing is revealed I'll decide what I want to buy more … the camera or the stock.