According to a report in Sporting Goods Business, shares of GoPro Inc. fell 96 cents, or 12.8 percent, to $6.56 on Monday after the company announced plans to cut 254 jobs as well as exit the drone category in part due to a “hostile regulatory environment.” The company also significantly reduced its Q3 guidance.
“At the start of the holiday quarter we saw soft demand for our HERO5 Black camera,” said GoPro founder and CEO Nicholas Woodman. “Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier. Our December 10 holiday price reduction provided a sharp increase in sell-through.”
Globally, HERO5 Black sell-through more than doubled in the two weeks following the December 10 price reduction, while HERO5 Session sell-through roughly tripled.
GoPro expects revenue to be approximately $340 million for the fourth quarter of 2017, including a negative impact of approximately $80 million for price protection on HERO6 Black, HERO5 Black and HERO5 Session cameras, as well as the Karma drone.
Sales of the newly introduced flagship HERO6 Black camera performed as expected during the fourth quarter. But on January 7, GoPro lowered the price of its premium model, HERO6 Black from $499 to $399 to align with its good, better, best product strategy.
Initial uptake of GoPro’s newly launched spherical camera, Fusion, was better than expected during the quarter.
“GoPro is committed to turning our business around in 2018,” said Woodman. “We entered the new year with strong sell-through and are excited with our hardware and software roadmap. We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018.”
GoPro is reducing its global workforce from 1,254 employees as of September 30, 2017 to fewer than 1,000 employees worldwide. GoPro founder and CEO Nicholas Woodman will reduce his 2018 cash compensation to $1.
Although Karma reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market. Furthermore, a hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead. These factors make the aerial market untenable and GoPro will exit the market after selling its remaining Karma inventory. GoPro will continue to provide service and support to Karma customers.