Can GoPro Resume its Rally Last Week?

Last week was a significant one for GoPro Inc (NASDAQ: GPRO) as its Karma drone hit retailers on Sunday and the stock also experienced positive momentum during the previous sessions. The action camera company’s stock edged higher by 9.8 percent during the prior week due to rumors of a takeover deal, the buzz about the drone’s launch and a third party’s bullish report on the initial sales of the Hero 5 camera.

Among these catalysts, the most significant one is the report regarding robust sales of the Hero5 camera.

According to the latest report of the independent investment research firm Cleveland Research, the Hero5 which was launched earlier this October is selling well. Moreover, the Ohio-based research firm forecasts that the action camera is experiencing higher than expected sales with partner fulfillment levels seeming to be responsible for at least 50 percent of the total orders.

Several analysts believe that there will be a massive rally in sales and earnings for the present quarter, but for that to come to reality, the Hero5 action camera has to be a huge hit. The most recent report by investment research firm implies that the encouraging scenario could set the company up for a significant surge.

Meanwhile, there isn’t a lot when it comes to the potential acquirers of GoPro or if the action camera company would actually consider takeover offers. However, it is obvious why some companies may be interested in buying the consumer tech company. The best time to purchase an established brand is when it is in a rut, and it is better to offer now than wait until it finds a holiday hit in the recently launched Karma drone or the Hero5 camera.

Takeover rumors are normally speculative fluff and do not offer a sustainable rally unless the company actually strikes a deal. The same is true for the hype surrounding a company’s new product, as actual sales will have to materialize for the product to live up to the buzz.

Of course, investors will appreciate last week’s rally in the GPRO stock since it has declined by 17 percent in the previous week after it disclosed that the Hero5 was not available directly through Amazon.

The action camera company anticipates to resume selling directly to the ecommerce leader by the end of October or in the early part of November.

Although Amazon is a significant outlet, it is not something to worry about unless the situation does not improve as we get closer to the crucial holiday season. For now, what matters is that the Hero5 camera is selling well and it’s time to see if the Karma drone will follow its footsteps.

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