GoPro Inc (GRPO) shares tumbled over 20% in after-hours trading following the company’s huge earnings miss. The camera maker recorded a loss of $0.60 a share, 24 cents worse than the analysts’ estimates loss of $0.36. Revenue fell 39.9% to $240 million compared to a year ago, and was a miss of the eyed $303 million estimate. The company also cut its 2016 revenue guidance from $1.35-1.50 billion to $1.25-1.30 billion.
CEO Woodman noted, "These are the best products we've ever made and consumer demand is strong. GoPro is now a seamless storytelling experience and we're very happy with customer reception so far. Looking forward to 2017, we expect to return to profitability, driven by the strength of our new products, double digit revenue growth and annual operating expenses of approximately $650 million."
Price action on the GPRO daily chart shows the bearish trend is firmly in place and that price has lost around 50% of its value this year. The stock is tentatively finding support from both the psychological $9.00 handle and the 161.8% Fibonacci expansion level of the $12.58 to $17.68 rally. If we see this key support level taken out, further downside may target the 2016 low of $8.62. If we see price stabilize here, key resistance will come from the $11.19 level.
The Trade: Sell GPRO at $10.50, with a stop loss at $11.00 and a take profit at $9.00. The Risk/Reward Ratio is 1:3