GoPro shares are looking a lot like the action camera videos its fans often take — breathtaking.
Shares jumped 20% to $48.80 Tuesday and are up 103% in just four trading sessions following Thursday's $24 initial public offering.
How much more pop is there in GoPro? The lone stock analyst who currently covers the company, Charlie Anderson of Minneapolis-based Dougherty & Co., tells USA Today that GoPro may have more room to climb.
Anderson issued a buy rating and a $28 price target before last week's IPO, saying there hasn't been as valuable brand name in consumer tech since the early days of Apple's iPod. "At the moment, (GoPro) has already defied the odds by trading at a multiple higher than anything has seen during the iPod/iPhone/iPad era,'' he says.
As a stock analyst, GoPro's IPO's performance has been both satisfying and as unnerving as some of the GoPro action videos that have become ubiquitous on YouTube and other social media sites. "Sometimes, the valuation stops mattering and it's just about emotion,'' Anderson says.
Anderson likens investor enthusiasm for GoPro to that of GPS equipment maker Garmin — circa 2007, before most smartphones were able to replicate Garmin's digital mapping capabilities. Garmin shares topped out at about $123 in 2007, bottomed below $15 in 2008 and now trading at about $61.
"The smartphone blew the Garmin dynamic out of the water,'' he says. "This one is different. It's a niche market at the moment, with just 4 million units sold - that's just one month of iPads. But the stock is trading like people believe everyone is going to have one. I'm not sure I do."
Smartphones probably won't undermine GoPro cameras, as they did Garmin's GPS devices. "As they are designed today, they don't represent any threat to GoPro's business,'' he says.
Still, GoPro's 94% share of the action-camera market is likely to come under pressure from competitors. Smaller HD cameras no larger than a matchbook are also under development from several startups. And Garmin, which launched the Virb last August, could be GoPro's biggest threat. So far, though, Virb sales have been underwhelming.
"GoPro is a product that will be tough to unseat,'' Anderson says. "It's a situation where there's a love of the product, wrapped up with American pride, which is very rare in this category. It's a powerful elixir."
At its current stock price, investors may want to be a bit wary, however.
Speaking on cable TV's CNBC Tuesday, venture capitalist and Shark Tank star Kevin O'Leary suggested that given the IPO's strong performance, amateurs may want to stay away from GoPro shares.
"I was wrong on the IPO, that doesn't mean I'm wrong on the short thesis," O'Leary. said. "When you're short you have to be willing to take your losses. In the end, the opportunity is not going long, it's going short. Now is not the time to do it on this stock. The allocation for funds that didn't get shares is still happening. But eventually I want to be short on this. The upside can be 50% on a short sale."
