GoPro (NASDAQ: GPRO) roared ahead over 10% last week after the company issued a surprisingly bullish outlook. The stock is still well-below the yearly high of $17.68. Fundamentally, it still loses money but GoPro could be a turnaround play for investors.
GoPro issued a third-quarter forecast, saying it expects revenue as high as $310 million. This is $6 million above the average consensus estimate. Gross margin will also be in the high end of the range. If investors hold the stock instead of taking profits, then GoPro could still offer more upside.
Fundamentals are unfavorable: GoPro does not have good sales for the Fusion camera. Retailers are giving the brand less store space. That could pose a challenge for GoPro in meeting its new forecast.
Short-selling is crowded for the stock at a short float of 34%. At least JPMorgan (NYSE: JPM) is on GoPro’s side. The analyst, Paul Coster, thinks the company could lose just $0.02 a share in FY2017, $0.57 a share in FY2018, and an optimistic $0.94 a share in FY2019.
Takeaway
Bearish volume is unusually high for GoPro. Any small earnings and revenue beat will squeeze shorts. GoPro does not have a high bar to cross.
