Tomahawk, WI 08/01/2014 (Basicsmedia) – GoPro Inc (NASDAQ:GPRO) posted its first earnings as a public company, and the results smoked estimates by a comfortable margin. However, traders are concerned about the stock’s valuation and on CNBC, Josef Schuster; founder of IPOX Schuster discussed the stock’s valuation issue and what lies ahead for the company.
Like most other analysts who have weighed in on the stock of GoPro Inc (NASDAQ:GPRO), Schuster also agrees that the stock is overvalued. In fact, he said the stock “has run ahead of itself.” The problem with the stock is that it came to the market in a blaze but now investors cannot help but question of kind of company GoPro is now that the values are nearly double what they were originally.
“I believe prices have run ahead of itself right now. Obviously the numbers hit the mark slightly better than expected,” observed Schuster about the slightly inflated value of the stock.
GoPro Inc (NASDAQ:GPRO) reported earnings of $0.08 per share at time when analysts were looking for $0.06 per share for the quarter. Revenue was $245 million, ahead of the estimates at $238 million. Revenue was up more than 38 percent from the same quarter last year, when it was a privately held firm.
As to whether GoPro Inc (NASDAQ:GPRO) should be categorized as media or hardware concern, Schuster said he values the company more as a media concern than a tech hardware concern. However, he noted that the company faces big challenges in extracting value and monetizing its activities, especially with regards to software sales and YouTube.
According to Schuster, GoPro Inc (NASDAQ:GPRO) does not provide details about its value extraction and monetization activities, nonetheless, gross margin has been noted to be on the decline in recent times compared to the previous years.
“[…] the company does not give details how it wants to extract and monetize the value from its activities, interestingly also is the gross margin in the hardware business has been coming down declining from 57 to mid 30s in the past years,” he said.