Gopro was once popular household name The brand was everywhere because of its versatile camera quality and features. It was a prized possession for ever #vlogger or #YouTuber. However, when it comes to its stock prices, it stands nowhere. Today the stock prices of gopro is down by more than 94%. GoPro is considered a "wealth destroyer" primarily because its stock price has plummeted by over 94% from its peak post IPO, resulting in massive losses for investors.
Why??
Because brand popularity is not equal to great business
economics.
The situation of gopro can easily be connected to India's much hyped ipo frenzy market. Every second week a new ipo launched in the share market which starts cresting a lot of noises. As soon as the #ipo is launched, everyone talks about ;
over subscription
high grey market premium
listing gain guaranteed stories by different analyst.
But the real money is not made on listing day, it is made on years of business performance after that. This is where the Gopro teaches an important lessons to the ipo investors. Before investing in any IPO an investor should ask
Does company have pricing power : it is a firm's ability to raise prices for its products or services without losing significant customer demand or sales
Can it defends margins : Robust margins provide the necessary capital for reinvestment and serve as a crucial buffer against unexpected economic challenges, such as inflation or supply chain disruptions.
Is demand sustainable or or just a trend : a sustainable business appears to be a long lasting impression than a passing trend.
Is management selling or buying ; it refers to if the insiders likes the owners or directors are purchasing or selling their company's stock. This signals confidence (buying) or potential issues (selling), indicating belief in future growth or concerns about undervaluation/fraud.
Analyzing the company profile and objective are important before putting the money into their business. Do remember, good storytelling creates hype, while good business creates wealth.
In good faith - Peace!!