The firm's analyst John Donovan noted that Ambarella relies on GoPro for about 30–32 percent of its revenues. However, the analyst noted that Ambarella is wisely expanding its market opportunities, taking cognizance of the weakness at GoPro. Donovan also highlighted the fact that the company is currently working with some of GoPro's competitors in the action camera and drone markets.
BlueFin also feels Ambarella would play out well into the wearables and AR/VR markets. While noting that Intel Corporation INTC and QUALCOMM, Inc. QCOM describing designs for glasses, the firm said Ambarella has a tremendous opportunity in the space as well. Another area the firm indicated that Ambarella can diversify is into is the unrestricted devices.
Notwithstanding these diversification initiatives and opportunities, BlueFin believes GoPro and Ambarella's fortunes will be intertwined with each other in the near term. Although the firm is upbeat about the reception for the recently introduced new products of GoPro, it noted that the company is estimating about 50 percent of its annual revenue in the fourth quarter. A small miss there, according to the firm, could wreak havoc for both firms. Accordingly, the firm said it remains cautious on Ambarella.
In pre-market trading, shares of Ambarella were down 1.04 percent at $66.35, while those of GoPro were down 0.87 percent at $17.
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