Most consumers, adults and children alike, will be clamoring this holiday season for the latest GoPro camera – the Hero3, which ranges in price from $199 to $399, as well as accessories to go with the cool gadget, such as the GoPro Fetch Dog Harness. Why? Because it is new – if you are not an extreme sports athlete, you most likely do not own one. It is cool. It is technology that can be used. It is not a derivative of an existing gadget or a minor variant of one. And it is everywhere in the media.

The Wild Ride of GoPro’s Stock

GoPro Inc (NASDAQ:GPRO) release their initial public offering on June 26^th this year at an IPO price of $24 per share. On August 29^th, the stock price closed out at $51.80 per share

Currently, GoPro shares trade at an incredible 53 times its forecasts for 2015, and a more conservative PE/Growth of 1.55. the company is expected to increase its earnings estimations as the time for the holiday season draws near. Estimates for 2015 are fast approaching the $1.20 a share mark.

These are quite incredible numbers of a company that sells consumer products. However, the Hero3 is not just a consumer product, but it is one of the very first consumer products that connects the user to the internet while providing a unique experience for everyone who uses the product.

From A Different Perspective

If we take a look at the situation of some dynamic companies, including Apple Inc (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), Netflix (NASDAQ:NFLX), and Tesla Motors (NASDAQ:TSLA), all these companies have valuations that are incredibly inflated. When put in this context with all the companies that focus on technology, GoPro’s valuation may not be so crazy after all.

GoPro And YouTube

GoPro has learned how to make use of a world where seemingly everything is shared on YouTube, and where the eternal quest is to stand out, and where there is a growing real time platform operability. There is no question that YouTube has become an incredible phenomenon in our age.

In 2013, customers of GoPro put up about 2.8 years worth of footage onto YouTube with “GoPro” featured in the title. In the first quarter of 2014, the average daily upload figure was 6,000 with more than 1 billion views, meaning that people watched more than 50 million hours of videos with GoPro in the title, tags, description, or filename.

The Cool Factor

Initially, the company’s tiny point of view cameras was used by skiers, skateboarders, and surfers to show off and share their tricks to the world. GoPro is the perfect outlet for the cool and unique characteristics of the typical teen, young adult, and more.

NPR Joins In

When you realize that NPR is thinking about a new pet attachment for the GoPro, you know that it’s a cultural phenomenon. When Jim Cramer from CNBC is raving about the product and how everyone he talks to wants to buy one, you know that it’s a cultural phenomenon. When a Google search for “GoPro” sends you back 109 million results, you know you have a cultural phenomenon.

Growth From 0 Percent to 45 Percent in Four Years

GoPro’s first HD camera was released in July in 2009. Since then the company has sold more than 8.5 million units of the high definition cameras. 3.8 million of those sales were in 2013. GoPro currently sells its products in more than 100 countries and through more than 25,000 retail store locations, which include extreme outlets such as Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT), and Dick’s (NYSE:DKS), as well as smaller retailers. In the year 2013, GoPro’s products were the number one selling camcorder with a market share of 45 percent (this is an increase of 11 percent from 2011), and the number six seller in accessories in the United States.

Patents

So far, GoPro owns 42 issued patents and 72 patent applications. Does this mean that the company is protected from the knock offs coming from China? Probably not, but it does mean that there is a considerable time to establish and ground its brand before the copies flood the market.

However, given that GoPro’s cameras are a “cool” product, the poorly made knock offs won’t hold up to the value of the real deal. For eample, Apple’s iPhone has performed very well over seven cycles, powering through numerous competitors in the high and low end of the market for mobile phones. Similarly, GoPro has that same opportunity.

Expect The Innovation And Coolness To Continue

GoPro’s latest model, the Hero3, was released onto the market in late 2013, and will most likely be replaced by a newer model (my guess is the Hero4) by March of 2015. The turn over is a bit longer than initially expected, but should give ample room for a strong performance during the holiday season and continue its solid performance into 2015.

The Apple iPhone is very similar to the GoPro Hero. Apple has retained its high margins over a long period of time by keeping true to their cutting edge look and feel of their produc. It seems that these aspects are important to keep in mind when discussing GoPro. Consumers want a great product with functionality as well as coolness. Today, GoPro has the cool, the quality, the functionality, as well as the momentum. Assuming that the company continues to innovate as it has done so in the past few years, there is little doubt in the fact that consumers will continue to be attracted to and purchase the experience that GoPro offers.

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