GoPro's Q1 Results: 'GoWow' Or 'Go Short'?

In February, analysts were very impressed by GoPro Inc's GPRO fourth quarter results. Cody Willard, chairman of Scutify (a financial social network) and Futr (a futuristic messaging app), was particularly excited. "How about 'GoWow'?" Willard told Benzinga. "The magnitude of that beat and the size of that top-line and the strength of their margins was very impressive. I've been leery and still am about GoPro's long-term ability to keep those margins up, but at least for now, margins looked great and the top-line beat was phenomenal." Willard was much less impressed with the company's first quarter results.

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"The numbers looked really bad to me," said Willard. "GoPro's profitability has been better than most analysts expect but the overall business trajectory seems to be peaking." When asked if this was by no means a "GoWow" quarter, Willard replied, "Gosh no." "The thing that stood out to me in GoPro's quarter is they brag about the GoPro channel videos being published were up 93 percent," he said. "But then the kicker is, views were up 46 percent. So the GoPro channel is becoming an echo chamber." In the end, Willard simply wasn't inspired by GoPro's results. "I've been a GoPro bear since the stock doubled after it came public," he concluded. "I'm still a GoPro bear and I might eventually even become a GoPro short. So this quarter was not GoWow, this quarter was go short."

Surprised By The Tumble

GoPro was initially down in after hours trading, which surprised Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report. "The numbers are actually really good," he told Benzinga. "I am a little surprised the stock is down five percent. Maybe given the Twitter weirdness and the fact that Apple produced a big beat and was down today, maybe people are saying, 'I'm not gonna wait for that, I'm gonna get out of GoPro.' But if you had that mentality, you had all afternoon to sell GoPro." GoPro spiked during its earnings call and is now up more than eight percent in after hours trading. "My take on GoPro is that they're the anti-Twitter," said Udall. "They beat hugely and guided very strongly. We'll see what happens. I am much more interested in buying GoPro each $1.50 lower it goes than Twitter, I can tell you that much." Udall said that the bottom line is that the international expansion looks good. "They beat by $23 million on the revenue side," he added. "They crushed earnings numbers." Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.