GoPro announced on Wednesday that its sales performance did not meet the expectation in the fourth quarter 2015. It addressed that it will streamline 7% of its workforce as well. Being affected with this news, GoPro share price dropped 28% after trading-hours on Wednesday.
GoPro revealed that the revenue of the fourth quarter was $435 million, and annual revenue was $1.6 billion. These figures are far below its market expectation. Thomson Reuters reported that some analysts predicted its fourth quarter revenue would be $511.9 million. The reason why 4Q revenue did not meet the expectation was its camera sales did not perform well as predicted.
Morgan Stanley analyst reduced GoPro target share price in October as Hero4 did not make a since releasing. GoPro cut the selling price of Hero4 shortly after its release. GoPro claimed that such price adjustment of Hero4 led to a loss of $21 million.
GoPro workforce increased by 50% in the past two years. It had about 1,500 employees by the end of 2015. To carry out this workforce reduction plan, GoPro will spend $5 million to $10 million to dismiss its employees.
Nicholas Woodman analyzed the reasons why Hero4 did not perform well were higher price and fewer promotions.
Its 4Q0215 performance is not a good sign for its development in 2016. GoPro is supposed to report the 4Q and annual earnings of 2015 on Feb. 3rd.
GoPro share dropped $ 3.31, closing at $11.3. It encountered the range of a price drop at 22.66%.
