The GoPro brand, which has been struggling economically for the past year or two, saw its debts peak this year. Auditors believe the company can no longer sustain its existence.
GoPro, which brought a new breath to the action camera industry and became its locomotive, is on the verge of bankruptcy after failing to cope with competition. The company, which suffered significant losses last year, has entered a very critical 12-month period.
GoPro might close its doors
According to an 8-K filing submitted to the SEC for significant developments, auditor PricewaterhouseCooper issued a written warning stating that doubts have arisen regarding the company's ability to continue operations due to substantial losses. The auditor considers the next 12 months to be very critical.
Last year, GoPro's revenue dropped by approximately 20% to 651 million dollars. Its hardware division generated only 545 million dollars, a nearly 50% decrease. The software segment reached 105 million dollars. Total losses amounted to 93.5 million dollars, while cash reserves plummeted by more than fourfold to 50 million dollars. The company, which accumulated 100 million dollars in debt over the last two years, also cut 23% of its workforce in recent months.
Founded in 2002, GoPro developed its first action camera in 2004 and sold it for $30. The company went public in 2014, raising its stock price from $24 to $93.85 in just five months, reaching a market value of 11 billion dollars. Today, its shares have fallen to $1.11, and its market value is only around 188 million dollars.
Three critical events led the company to its current state. The first was its entry into the drone sector in 2016 with the Karma model. Due to unresolved malfunctions, 2,500 products were recalled from shelves in 2018, forcing the company to cut 20% of its workforce that year.
The other event was the pandemic. After cutting 20% of its workforce due to declining sales, GoPro suffered its final blow from the memory crisis. Unable to meet the necessary memory requirements for production, it was forced to cut another 23% of its remaining workforce. The advancement of smartphone cameras and the erosion of market share by rival action cameras only exacerbated the situation.
Nick Woodman, who once held the title of Silicon Valley's highest-paid CEO, now works for a symbolic annual salary of $1. If things don't improve, the GoPro brand will be the third company Woodman has closed.
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