Following a set of disappointing sales results of its cameras, GoPro Inc (GPRO.O) has estimated a fourth-quarter below market expectations and has said it has little choice but to cut 7% of its workforce, which would not only $5m-$10m in restructuring charges but would cause shares into freefall.
Whilst Traders expected to miss the revenue over the holiday quarter, they had not expected to a loss of this magnitude, with shares falling by 28% to $10.50, currently standing at less than half of its 2014 price.
This drop in sales is thought to be a result of cheaper alternatives for example, China’s Xiaomi (XTC.UL).
Ben Wood, analyst at CCS Insight, said;
“It appears that despite being the brand synonymous with action cameras, GoPro has likely to succumbed to the avalanche of copycat products that appeared in time for the holiday season. With similar specifications but significantly lower prices they were always likely to be a dangerous competitive threat”
Ambarella Inc (AMBA.O), which provides chips used in GoPro’s cameras, also fell after-market trading by 8.5%