GoPro Inc (NASDAQ:GPRO) is going to release its third quarter earnings this week. According to the market experts there is not much to expect from the report. The company has witnessed many things going around in the last few weeks, everything from Karma and HERO5 being launched to reports on channel verifications to worries about execution and production. Quarterly earnings will work as a chance to check on performance and if the company will meet market expectations.
The highlights
Revenue performance in 3Q2016 will help the market interpret if the company would be able to meet its full year projection. The analysts are anticipating GoPro to post $316 million compared to revenue of $221 million in the preceding quarter. Adding the first quarter revenue of $183 million to this, the year-to-date revenue stands around $720 million.
Considering management’s guidance for full year of $1.35 billion to 1.5 billion, this indicates the fourth quarter revenue needs to come in between $626 million and $776 million. If during this quarterly release, the company affirm this full year guidance, then the market concerns may ease.
It should be noted that management was conservative in their preliminary annual guidance so that it doesn’t loses winning streak. The current shares price is holding on to concerns where guidance may not be met.
Something to discount is GoPro has entered the last quarter of this fiscal with a lower inventory compared to 2014 holiday season. Last holiday season, the company reported excellent performance. If it can repeat similar performance, it could be tremendously effective in hitting full-year projection. The firm can turn over the challenging times to comfortably surpass or meet guidance.
However, key query is how the HERO5 is doing and what the agreement is with Karma. The market is looking for clear answers to interpret how well sell-through and sell-in are occurring. If HERO5 and Karma face any kind of supply concerns where it would lead the channel not to be complete, it would loosen any kind of guidance anticipations. If production comes as projected with increasing demand, it would be a good indication and the shares price should respond in-kind.
