Shutterfly Inc. (NASDAQ: SFLY) Rises High As GoPro Inc. (NASDAQ: GPRO) Falls

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By dmcIntire on July 3, 2014 Consumer Staples, Technology & Software

Yesterday, publishing company Shutterfly Inc. (NASDAQ: SFLY)’s stock surged more than 14%. This increase followed shortly after the company would hire Qatalyst Performers, and investment bank, to help find a buyer and streamline the possible sale. However, it is noted that the discussion between the two companies are still in preliminary stages, and it is possible that a deal may fall through. However, investors are clearly celebrating over the news.

Shutterfly provides digital photo and publishing services and allows users to purchase tangible products, such as photobooks, personalized photo cards and stationary filled with digital photos taken by the user.

What kinds of buyers is Shutterfly looking for? cloud storage companies, e-commerce platforms, and private equity firms could benefit from Shutterfly’s assets. Shutterfly declined to comment on the matter.

The average stock trading volume for Shutterfly over the past 30 days has been 895,000 shares. The company has a $1.6 billion market cap

Currently the company is worth about $1.92 billion. Last quarter it reported revenues of $137.1 million. Last year 2013, the company posted $783 million in revenue, a 22% increase from the previous year. In the past five years, the company’s shares have risen more than 200%.

However, the company has been slipping recently despite its topline growth. It only made $9.3 million in net income last year. Its shares have decreased 14% over the last twelve months. Last quarter, its loss per share was $0.82, exceeding analysts’ expectations of $0.94. The average twelve month target price is $55.33. Compared to other companies in the industry and the overall market, Shutterfly’s performance and return on equity trails behind the industry average as well as the S&P 500.

Given these stats, of 11 analysts, 6 rate the stock “sell”, 1 rates it “hold”, and 4 rate it “buy”.

If Shutterfly continues to go down this deteriorating path, finding a buyer may not be easy. Investors with a stake in the company may be burned by low earnings in future quarters.

On the other hand, GoPro Inc. (NASDAQ: GPRO)’s stock took a tumble today. The camera company’s IPO hype fizzled out as the share price fell nearly 15%.

The company’s stock had more than double its $24 IPO price since last Wednesday, but upon news of short sellers taking action, the stock fell. Although it is common for stocks to be unpredictable initially, GoPro’s instability are more significant that usual. According to Astec Analytics, all of the company’s shares that are available for borrowing, i.e. shorting, have been done so. This indicates that many investors expect the stock to fall.

However, this sudden drop does not spell out disaster for the ten year old company. The company is profitable. Its cameras lead the market for sports and adventure videos. Endorsements from celebrity athletes such as Shaun White helped propel sales to $986 million last year in 2013, yielding a $60 million profit. It was also reported that GoPro will open a new revenue stream by offering ad space in their videos.