In a statement today, GoPro announced that it's killing off its drone division and laying off 20 percent of its workforce. Longbow Research raised shares of GoPro from a "neutral" rating to a "buy" rating and boosted their price target for the stock from $9.60 to $13.00 in a research note on Wednesday, October 18th.
Other research analysts have also recently issued reports about the company. Instead, the action camera maker confirmed it's ending Karma production and will cut almost 300 jobs, or more than 20% of its global workforce. The company announced significant layoffs a few days ago: the layoffs will bring the workforce down to under 1000 and CEO Nicholas Woodman will take a paycut to $1 as the company struggles to get back on its financial feet.
GoPro has had a hard couple of years, as it faced intense competition and poor performance in the drone market. "After trading resumed, the shares fell further, and the stock was down 30 percent by 10 am".
While the company states although the Karma Drone saw success, there were multiple factors that lead to the final decision.More news: Meghan Markle Deletes All Social Media Accounts Ahead of Royal Wedding
Nick Woodman, the CEO of the action camera manufacturer stated that the company would consider a sale or partnership with another company, but the firm's intention would be to remain independent. GoPro also said that would kill its Karma drone business amid poor sales and a glitch that caused the device to shut down in mid-flight and led to a recall after it debuted in late 2016. After $0.09 actual earnings per share reported by GoPro, Inc. for the previous quarter, Wall Street now forecasts 277.78% EPS growth.
"GoPro is committed to turning our business around in 2018", Woodman said alongside the news about the end of Karma.
According to Woodman, GoPro's new hardware and software plans, coupled with lower operation expenses should allow the company to be profitable again. Wittine points out a quote that stands out from his conversations is a supply chain contact looking for a year of more challenges lying ahead for GoPro.