GoPro Inc. Announced Lower Than Expected Revenue for the Fourth Quarter.

The action camera maker is keeping its hope too high; its about time it lowers its expectations.

For the fourth quarter, GoPro Inc. had announced lower than expected revenue on January 13, 2016. The remaining of the financial results along with the Q1FY16’s guidance will be announced by the company on February 3, 2016

GoPro Inc.’s stock is down by 5% which is close to its low record; additionally in a six month’s-time the shares of the manufacturer action camera is down by 82%. This decline in the stock price was mainly due to the failure and low sales of the company’s latest flagship product of the Hero series in the previous two quarters. The Hero series consisted of the Hero 4 Session that was launched back in July of 2015 and since then it has not performed too well in the market as it proved not to be too popular with the consumers.

In order to attract consumers to purchase the Hero 4 Session, the management of the action camera manufacturer had to lower the price of the device twice as it had put a high price tag. However, even this strategy did not attract enough people to buy the product.

The failure of the Hero 4 Session was  not the only reason as to why the stock price when down; additionally the slow growing economy of China was also a major culprit that the stock of the company went below the $10 mark in the beginning of the previous month. 

Investors were furious at the performance of the Hero 4; they were so disappointed in the company that they filed a lawsuit against it last month in which the shareholders accused the management of the camera maker that they had not informed the investors regarding the low demand of the device beforehand.

Another thing that the investors pointed out in the lawsuit was that the management had reported estimated results for the fourth quarter, according to which the company was to generate $500 to $550 million but it failed to live up to its estimations and made $435 million instead – which made the shareholders quite upset. Analysts and investors at this point are more interested in knowing what the first quarter has in store.

The company expects to get as much as $297 million in revenue by the end of March which according to Jeremy David, an analyst at Citigroup, “too optimistic”. He is predicting it to be somewhere around $230 to $250 million – mainly because he is expecting the sales for the first quarter to be low. He is not the only one expecting the sales to be low; at this point Erin Murphy of Piper Jaffray also believes that the sales of GoPro will be lower than the expectations of The Street. She has predicted an estimate of $272 million and slashing the target price to $7.50 from an initial target price of $9.00