GoPro (GPRO) has been on a rough road in the past year. It's down 57% in the last 52 weeks. Last weekend, Barron's took a torch to it and said it could fall considerably more.
One of the arguments put forth by the bears in the stock is that it's a commodity. Barron's made the comparison between Flip and GoPro. The kinds of competitors who might make inroads against GoPro, according to bears, are Apple (AAPL), Sony (SNE) and Xiaomi in China (which is now a top 10 country for GoPro).
With all due respect to the critics, I think these fears are preposterous.
In the case of Flip, we all bought those cameras because we wanted to take digital videos and easily be able to put them on our PCs. This easy option wasn't available during Flip's heyday in 2007-08. Sure, the first iPhone came out in mid-2007, but it wasn't immediately widely used, nor could you record a lot of videos on it at first.
Yet, by the time Cisco (CSCO) bought Flip in early 2009, the iPhone was becoming a credible alternative to a Flip. And it was so much more convenient to use, as it was with us already.
Flash forward to today. Nobody I see is strapping an iPhone to their heads as they jump out of an airplane or kayaking down a river. Nor are they likely to any time soon, even if the iPhone gets better and better.
The GoPro is a high-end camera for action/sports situations. Sure, there are some moments where it will be easier to just use your iPhone, but a meaningful number of consumers will still want a GoPro for specific types of events going forward. Xiaomi will be in the same boat competing in China against GoPro.
And Sony? Hasn't Sony been trotted out as the company about to give a lot of competition to any new hot piece of consumer technology for the last 30 years -- to no avail?
So we come down to price for GoPro. Is it expensive?
At these levels, I think it's hard to make that argument any more given its growth rate. It's still growing quarterly revenues at more than 70% a year. GoPro is expanding its sales footprint around the world.
On an enterprise value to EBITDA ratio, it's trading at less than 14x. That's not that expensive, given the growth profile. Facebook's (FB) ratio is 39x. (Apple, Cisco and Facebook are part of TheStreet's Action Alerts PLUS portfolio.)
Could GoPro's stock go lower from here? Sure. Anything could happen. Any stock could go lower. Macro stuff could happen.
But look at today when the Dow is down triple digits: GoPro is up as of this writing.