GoPro Inc (NASDAQ: GPRO) has been one of the most hyped-up stocks of the year. Many investors claim that the company’s stock is headed towards the $100 mark within the next few weeks – a claim that is grounded in nothing but pure optimism.
These advocates for GoPro equate the company to the likes of Amazon (AMZN), Facebook (FB), Google (GOOG), and Netflix (NFLX), as if GoPro is nearly as groundbreaking as they were.
It is possible that GoPro could continue the amazing sales run it has been experiencing so far. However, there are reasons for being wrong to liken the camera company to the innovative tech geniuses that have paid off tremendously for their investors over the years.
GoPro vs Tesla Motors (TSLA)
The first difference is the target market – the number of people who will own a car far exceeds the number of people who will purchase a tiny camera. Tesla clearly has a much larger market than GoPro does, and thus its peak earnings will outdo GoPro’s.
See Next Story: Real Reason Why Tesla Shares Dropped Last Week
The second is the innovation. Tesla capitalizes on a technology that they developed themselves and cannot be replicated easily. Its electric cars are a huge step forward for environmentally consciousness, and set the bar for electric vehicles. The innovation of its technology puts it far ahead of all other electric car makers in the market – the second best electric vehicle can only travel a fraction of the distance Tesla cars do, and it is still rather expensive.
GoPro, at its core, is nothing new. It simply repackaged digital photography technology that existed ten years ago. Add a dynamic branding strategy, and GoPro is born. The value of the brand and the market in which it runs is the issue in question, but when you boil it down to the basics, GoPro offers no new technology.
Facebook is a monopoly in the social media world, with over 1 billion users all over the world. Each user leaves a significant digital footprint (made up of pictures, text posts, etc) and is connected to other users through a network of relationships. This database of information is essentially priceless, and barriers to entry are high, as we saw with Google’s Google+.
By comparison, GoPro’s camera is nothing special, and is being challenged already by producers of low cost alternatives.
Apple’s innovation started from the very beginning. The iPod was one of the first mass storage devices. Although other companies imitated the hardware, the ease and fluidity of the software was matchless.
Then the iPhone was a significant mover in the market. It drew users through by revolutionizing an existing necessity and kept them with its aesthetic software.
See Next Story: Apple’s iPhone 6 Launch May Save The Company
Additonally, the addressable market for phones is huge. Last year sales for smartphones reached over 1 billion per year. It is unlikely that cameras will reach that mark.
Vs. Google (GOOG) (GOOGL)
Google is a search engine giant with authority and market power that GoPro could never dream of having. There is no comparison.
All in all, GoPro could absolutely continue with strong growth in the near future. Will it reach the success of the tech giants listed above? Most likely no.
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