Shares of GoPro, the wearable-camera maker, experienced a sharp decline following the company's announcement of a fourth-quarter loss and a downgraded stock rating by Wedbush analysts.
Revenue Decline and Market Reaction
The stock dropped 13% to $2.54 per share during midday trading, leaving shares 27% lower than their initial value at the beginning of the year. This negative market response came after GoPro reported an 8% decrease in fourth-quarter revenue, which amounted to $295.4 million. Analysts polled by FactSet had anticipated higher revenues at $326.1 million.
Swing to Losses and Analyst Downgrade
GoPro's financial performance in the last quarter revealed a significant swing from profitability to a quarterly loss of $2 million (2 cents per share), compared to a profit of $3 million (2 cents per share) during the same period the previous year. However, adjusted earnings, which exclude one-time items, aligned with analyst expectations at 2 cents per share.
Analysts' Assessment and Outlook
In light of these results, analysts Alicia Reese and Michael Pachter from Wedbush downgraded GoPro's stock rating to "neutral." They also revised down the price target from $4 to $2. In their research note, they expressed concerns about the company's ability to achieve its previous sales growth targets in 2024 and beyond, pointing out limited margin opportunities on the horizon.
Despite these challenges, GoPro remains focused on recalibrating its strategies to regain market confidence and financial stability.
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