GoPro Inc (NASDAQ:GPRO) shares were knocked over 13% on Thursday following news of a fourth-quarter earnings miss and a subsequent downgrade by broker Wedbush.
GoPro reported on Wednesday that fourth-quarter revenue fell 8% to US$295.42 million, below consensus estimates of US$326.13 million.
This was the result of lower prices, alongside fewer-than-expected sales and a subsequent stall in subscription and margin growth, Wedbush explained.
Wedbush subsequently downgraded the stock from an ‘overweight’ to a ‘neutral’ rating, arguing the action camera developer’s upcoming targets were now in doubt.
GoPro had guided for first-quarter revenue to sit around US$145 million, with margins coming in near 32.5%.
This was lower than analysts anticipated and would see revenue and margins decline from US$295 million and 34.4% respectively in the fourth quarter.
“Prior sales growth targets appear unlikely in 2024 and possibly beyond, while margin expansion opportunities are limited,” Wedbush analysts wrote in a note.
GoPro’s plan to drive sales by expanding its retail channels could cannibalize direct transactions and erode margins further, analysts warned.
“Given soft fourth-quarter sales both domestically and in the Asia-Pacific region, coupled with lower-than-expected first-quarter guidance and 2024 subscription guidance, we no longer have confidence that GoPro can reach its prior growth targets,” they added.
Shares fell 12.7% to US$2.58.