After a report said that Chinese technology giant Xiamoi Corp. was considering bidding for sports camera makers, GoPro (GPRO) shares traded on Thursday afternoon rose by about 5%.
GoPro CEO Nick Woodman recently stated that he is willing to sell and earlier this year hired investment bank JPMorgan Chase (JPM) to advise the company on potential deals. According to informed sources, Xiaomi is interested in the offer but is unwilling to pay more.
Shortly after the story, GoPro’s stock price rebounded to an intraday high of $5.30. This move represents the largest increase in the stock since February 14.
The report also shows that GoPro may be as high as $ 1 billion, reflecting the price paid by HP in 2010 for the equally struggling electronics manufacturer Palm. GoPro’s value was once more than 10 billion US dollars, but its market value has dropped to about 750 million US dollars.
Although popular motion camera makers continue to launch high-quality products, the proliferation of smartphone cameras and increased competition in the outdoor camera market continue to affect the company’s revenue sources. Analysts expect GoPro to achieve net sales of US$1.07 billion in 2018, a decrease of approximately 9% year-on-year.
At the same time, the company has been working hard to turn a profit, and the debt problem now poses a serious threat to its chances of survival. In 2017, GoPro reported an adjusted loss of 69 cents per share, and our current consensus estimate requires the company to lose 42 cents per share in the current fiscal year.
It is worth mentioning that GoPro’s earnings outlook has deteriorated significantly over time. Just 90 days ago, our consensus forecast for earnings in FY 2018 projected earnings of 4 cents per share. In the most recent quarter, GoPro reported a non-GAAP loss of 30 cents per share, missing the Zacks market’s forecast loss of 10 cents.
GoPro investors will want further acquisition speculation to revive the stock, which has lost over 40% in the past year.