Tag Archives: virtual reality

Ready for Another GoPro Bounce?

Nick Woodman, CEO of GoPro

Nick Woodman, CEO of GoPro

This is a follow up to a couple of previous blog posts about Wall Street’s unwarranted bearish outlook on GoPro, which you can find in this first post and this second post. I was right about the stock rebound, but it has gone back down again, and I think it is a screaming BUY, so here we go again!

GoPro Inc. (GPRO) hit an annual low this month after reporting its second best quarter ever. According to GoPro Founder and CEO, Nicholas Woodman, “Our core business is enjoying terrific momentum as we charge forward into attractive adjacent markets.” GoPro hit its previous low in March after it continued to post strong quarterly gains, followed by another ascent on the back of continued strong results.

Surely, you ask, Wall Street must be missing something to cause the stock to crash yet again. The market seems to have the notion that GoPro, despite its impressive earnings, revenue, and margins, is once again on the verge of collapse as the action camera fad ends and sales plummet as it reaches its last niche customer. Not that there is any evidence of this, mind you, but that is the fear.

GoPro stock price roller coaster

GoPro stock price roller coaster

In the second quarter of 2015, GoPro reported almost $420 million in revenue, a 72% year-over-year increase and their best quarter ever. Earnings per share jumped from $0.08 to $0.35 year over year and gross margin increased 420 basis points to 46.4%. It was a beat on guidance for all three measures.

Third quarter guidance is for revenue of between $430-445 million, which would be a 56% year-over-year increase. EPS should be $0.29 to $0.32, with gross margin at about 46%. Analysts reacted to the strong quarterly results by increasing their own estimates and reiterating indications that the brand is still extremely popular.

All seemed well until the stock started in mid August to slide from the $60s to below $30 for no apparent reason. If this sounds like “déjà vu all over again,” it does seem to be a repeat of the previous period of volatility between December and March. After weeks of a declining share price, analysts started to point to previously-expressed fears about the company’s prospects against cheaper Chinese competitors such as Xiaomi or well-known brands such as Sony. Slower than expected sales of the new Hero 4 Session, which was priced at $399, the same as the Hero 4 Silver, caused GoPro to slash the price by $100. This caused analysts to fear that, this time, GoPro had finally lost its appeal.

GoPro Flying Bear

GoPro Flying Bear

Piper Jaffray downgraded GoPro based partly on the Session price cut and partly on a teen survey that showed a deceleration in holiday wish list activity and a reduction in its Amazon product sales index. According to Analyst Erinn Murphy, “We believe we are starting to see the tipping point of demand in our survey and against a holiday with no new products likely on deck, prefer to sit on the sidelines.” But she also cited volatility as a reason for “stepping to the sidelines” on the stock. Seriously—she cited volatility as a reason to downgrade a stock. That is just as bad as recommending a stock just because it is going up.

I suspect that simple fear and the taking of profits was the real cause for the stock’s price drop rather than any credible news. One of my favorite quotes from Frank Herbert’s science fiction classic Dune series is this: “I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration….” Well, the stock price has clearly been crushed over the past two months, but company performance is another matter entirely.

Fear is the Mind Killer

Fear is the Mind Killer

On September 1, GoPro’s video chip supplier, Ambarella, reported outstanding results, but provided guidance that made analysts even more nervous. What Ambarella’s CEO actually said during their Q2 earnings call was this:

“As we discussed in our Q1 earnings call, wearable camera revenues are expected to be down sequentially and year over year, reflecting the substantial build of newly released and existing products in Q2 of this year by GoPro and Xiaomi, rather than in Q3 as occurred in the prior years. However, we see the average of Q2 and Q3 unit shipments between FY16 and FY15 being in line with our growth expectations for this market.”

Sounds like no big deal, right? As you can see from GoPro’s guidance, they “only” guided for a 56% year-over-year increase in revenue for the third quarter, compared to the 72% increase in the second quarter. This makes sense if you consider Ambarella’s comments that the second quarter will show slower growth due to the shift in product launches back from the third to the second quarter.

The same kind of shift in sales happened in the first quarter of 2013, when holiday shipment delays caused a shift in revenues to January. This made the seasonal decline in revenue in 2014Q1 appear higher than the seasonal decline in 2013Q1. When GoPro had a blowout holiday quarter in 2014Q4 and issued conservative guidance for 2015Q1 showing an even larger seasonal decline, analysts panicked and drive down the stock price. Here is the GoPro guidance I’m referring to:

“Revenue and units shipped for the three months ended March 31, 2013 were impacted by production delays of our HERO3 Black edition capture device in the fourth quarter of 2012. These production delays correspondingly delayed shipments until the first quarter of 2013, which resulted in revenues in the first quarter of 2013 that did not reflect the traditional seasonality in our business. The three months ended March 31, 2014 were not similarly affected.”

After Q1 2015 results beat expectations, showing that action camera sales were not a fad already on the decline, the stock moved back up. What does this all mean? That analysts are prone to confirmation bias of any guidance, news, or even surveys that might confirm their worst fears. Namely, that GoPro is a fad that will eventually end, or will face overwhelming low-price competition, or will face other well-known competitors who will challenge their market share and compress profit margins. Yet, none of these fears have materialized. In fact, GoPro has been facing all these potential threads head on with brilliant marketing, top-notch engineering, world-wide sales channels, and a focus on entering new adjacent markets such as virtual reality and drones.

GoPro Hero4 Black vs. Session

GoPro Hero4 Black vs. Session

The Session camera appears to be a very good product that was improperly priced. Consumers seemed to prefer the Hero 4 Silver, which has a built-in touch display and higher-resolution video options. GoPro was actually quick to respond to customer feedback and correct the mispricing of this product, which should lead to better sales. In any case, consumers still seem to be purchasing high-end GoPro models rather than abandoning the brand for competitors.

What can we expect when GoPro reports its third quarter results on October 28th? I can’t say, because when fear rules, it isn’t enough to beat expectations, as Under Armour found out last week. Nevertheless, for investors who are focused on the long term, GoPro is a compelling investment opportunity. It is a company focused on growing into new markets and has a premium brand that gives it strong pricing power. I’m not willing to try and time the market by predicting when Wall Street will come to its senses, so I’m taking advantage of this pullback to pick up some more shares at an incredible discount.

Disclosure: I own shares of GoPro (GPRO).

Gratuitous Display of GoPro Marketing

Gratuitous Display of GoPro Marketing

Update: Boy, was I wrong on this one. Maybe it will bounce after it hits rock bottom! I’m still optimistic about drones and virtual reality camera rigs, so I’m still pulling for you GoPro….

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Hunger Games

Endangered Species in Africa

Endangered Species in Africa

How much, I wonder, would it cost to buy about one million square miles of sub-Saharan Africa? The continent itself is about 11.67 million square miles, but I don’t need it all. I just want to build a zoo large enough to save most of the endangered African animals. By contrast, the US is about 3.8 million square miles and the entire world has about 57 million square miles worth of land. Even with a human population projected to reach 11 billion people by 2100, surely there has got to be some room for our favorite large animals. Let’s face it, most people don’t really care about all the tiny, little-known creatures that are threatened with extinction. But we do care about the big, scary ones. The ones we go to zoos to see. Lions and tigers and bears–er, elephants–oh my!

African real estate can’t be that expensive, especially considering how much food, medicine, and money we already send them just to keep the poorest of them alive. It’s a pretty crappy place for people to live anyway. It’s beautiful, but harsh. I suspect that central Africa would be available at a bargain price if someone were to make the right offer. The only condition would, of course, be that all humans would have to move out and stay out.

We could move the native African populations to where, as Sam Kinison would say, the food is. Why keep sinking our money into sustaining poor African countries that can’t manage to even feed themselves when we could pay to build them a new habitat someplace else where they could actually sustain themselves with a sufficient amount of food, water, medicine and shelter? Pay off a few dictators and we’d have a deal for the zoo of all zoos. Actually, let’s call it a wildlife reservation.

Democratic Republic of the Congo

Democratic Republic of the Congo

Let’s look at the African real estate and see if there are any bargains out there. For example, the Democratic Republic of the Congo is smack in the middle of sub-Saharan Africa and probably a great place for wildlife. It is also one of the poorest nations. It has about 67.5 million people and a per capita GDP of $454 as of 2013. And it has been going down, not up, so I’m thinking it’s bargaining time. This comes to under $31 billion in GDP for over 900,000 square miles of space. That amount of space would do just fine for a wildlife reservation, and it’s chump change for the USA. We increase our national debt by more than that every two weeks.

I’d probably have to build some kind of wall around the reservation in anticipation of a rebound in the predator population and also, of course, to keep people out. About 50 years ago, there were about 450,000 lions, 700,000 leopards, 500,000 rhinos, and millions of elephants in Africa. Now, there are only about 20,000 lions, 50,000 leopards, 25,000 rhinos, and maybe 300,000 elephants left. They are still being slaughtered at rates that could easily drive them into extinction within the next decade or two.

So, here is my solution. Forget about zoos. Not only are they cruel prisons for animals, they are also boring. Who wants to go to the zoo only to, at best, get a glimpse of a lion sleeping in the grass or on a rock? Who wants to see a cheetah that can’t trot more than a few yards? This is the age of computers and global communications, so why not just scrap the whole idea of a zoo and provide a high-tech way to follow them into their natural habitat?

BBC Africa

BBC Africa

I know–we already have plenty of movies and documentaries featuring the animals of Africa. I do enjoy watching them, but this is not what I mean. How about a real, live, 4K super high definition, 3D feed from cameras and microphones, and maybe even odor sensors, in Africa watching, and maybe even following, them around. Throw in some infrared cameras for night viewing and we’ll have quite a show. We would use broadcast towers, self-driving jeeps with cameras, remotely piloted vehicles, or even balloons–whatever it takes. It would be the Greatest Show on Earth! Remind me to buy that trademark.

Survivor Africa

Survivor Africa

It would be kind of like the Hunger Games movie. No, exactly like the Hunger Games minus the people. Well, actually, I would consider including people if we find them trying to poach some of our protected wildlife. That would be a special pay per view event option for adult viewing only. To be fair, I would give them a knife to protect themselves, and maybe even a flak jacket, but obviously they would have to surrender their high-powered rifles.

Don’t give me that look, you know people would pay to see a guy get eaten by a lion or trampled by a rhino! The Romans did it for sport, but I would use it merely to discourage criminal activity within the zoo. Surely you can see the difference. It probably wouldn’t even be that frequent an event, but if it generates enough cash to help maintain the reservation, then it’s a win-win situation! I might even consider offering convicted prisoners on death row with a choice: survive for a month and you can go free. We would follow them around with drones and guys on the ground, of course, so it could be a new hit reality TV show. Move over Survivor Africa, here comes the new, improved, Survivor Africa! I have to remember to buy that trademark too. That show will certainly bring in millions of dollars in TV rights. Maybe there will even be action figures for the guys who actually survive. The abandoned human cities could even be used as film locations for disaster or alien invasion movies.

Steve Irwin Crocodile Hunter

Steve Irwin Crocodile Hunter

Eventually, the animal population would rebound and provide breathtaking viewing opportunities. We might even allow hunters into the park for special hunting events. No, they wouldn’t be allowed to use super long-range elephant guns. Just an old fashioned rifle and as much courage as they can muster. Maybe even guys like Steve Irwin, the Crocodile Hunter, will just want to go in with no weapons at all just for the hell of it! I guarantee you that the bidding for these limited opportunities would probably go through the roof and generate tens or hundreds of millions of dollars. Please don’t talk to me about cruelty to animals. If I can provide a park that saves many species from extinction and allows their populations to grow and flourish in freedom, then I think I can sacrifice a few of them to help make it all possible.

Every zoo in the world would be encouraged to give up their live animal cages and replace them with super 3D viewing, listening, and smelling rooms. We could even regulate the temperature, humidity, precipitation, and air movement to match that of the African environment. If the live video feeds aren’t exciting enough, we could record the best activity and replay it. Imagine listening to Enya’s album “Storms in Africa” while actually being in a virtual African storm!

The question is, can we earn $31 billion per year in revenues so that the place will at least break even? It might not have to if we can actually get the people of the Congo trained to be more productive than they currently are and we get a cut of the profit. We will probably have to reserve some real estate around the capital city of Kinshasa, which is fortunately near the edge of the country, as a place to relocate the citizens. However, I would prefer to create an entirely new type of city shaped in a ring around the wildlife preserve that is only a few miles thick but a thousand miles around connected by a high-speed rail system. This would provide the needed support for all the border guards and maintenance personnel who will need to work on the surveillance vehicles. I will, of course, need lots of people to build the border fences and border security guards to keep people from breaking in. To generate revenue, I would need vehicle operators and maintainers, video commentators and editors, wildlife guides, veterinarians, communications tower technicians, TV producers, etc. I’m working on that business plan right now.

Enya - Storms in Africa

Enya – Storms in Africa

I think it’s a cool idea and I’m willing to put billions of dollars on the line to get it started. I just need billions of dollars and a bit of diplomatic support to help get the people out of the Congo and into a new city. If you think this is a bad idea, then consider the alternative. We can do nothing until these animals really all are extinct and then have nothing left to build but a super 3D computer-generated viewing room full of fake animals doing what people think they would have been doing had they still been alive. Not so exciting.

Would you really choose virtual reality over real reality? If so, I guess you are also likely to settle for a virtual girlfriend instead of a real one. Good luck with that. I’ll be discussing virtual sex in an upcoming post, so stay tuned. But I’d rather look into the eyes of a beautiful lioness and hear her chilling growl than settle for a computer simulation any day.

Is Heaven Really Hell?

The Ghost Whisperer

The Ghost Whisperer

According to James Van Praagh, author of many books on communication with the dead and the inspiration behind the Ghost Whisperer TV show, we carry our old beliefs and habits with us after we die. This allegedly applies both to earthbound spirits and those that have progressed into the light, which is to say they moved onto higher planes of existence. This is discouraging news for anyone who expects to receive some answers after death or at least free ourselves of the stupid habits, phobias, and quirks we have accumulated over a lifetime.

When I die, I expect to be brought into a briefing room of sorts where some experienced soul will explain everything about life, the universe, and everything. With all eternity to look forward to, there must be plenty of time and opportunity for learning, no? I especially want to know how quantum theory really works and if string theory is the bunch of crap I think it is. I can’t imagine a heaven where there is nothing to do other than to float around worshiping some all-knowing deity who doesn’t want to share the secrets of the universe with the rest of us.

Can we really stay just as ignorant after death even after we shed our earthly influences? One would think that we would at least suddenly remember what happened during many past lives and be able to benefit from many diverse experiences, resulting in a sudden “aha” moment of truth! If we are able to read thoughts, then we would instantly know what everyone else thinks about us and they would know all the embarrassing things we did in the past. Everything would have to change. How could we not know more or be smarter, wiser and more accepting of others?

Nuns with Guns

Nuns with Guns

I was really hoping to be present to watch as some ignorant jackasses die and finally realize what how stupid they have been all their lives. That would be an even better reward than 77 virgins. I could just sit there, sipping whatever a soul of pure energy needs for sustenance, watching the newly dead arrive, blushing and embarrassed at their own ignorance and asking for my forgiveness (as if I’m qualified to offer it). Doesn’t everybody long to hear someone they know acknowledge that you were right all along? Doesn’t everyone really want to say “I told you so?” Of course, I’d have to carry my pride and personal grudges with me after death for this to be the case. And if that were so, then there is a good chance that I’d have to put up with some other pompous ass I couldn’t stand who was likewise waiting for me to show up so he could display his superior intellect or maturity.

The Invention of Lying

The Invention of Lying

Somehow, it just doesn’t sound likely and this isn’t how near death experiences are described. All we hear about is that people we loved come to meet us and lovingly help us move into the light. If these people were still the same imperfect creatures they were when they were alive, then dying would be a pretty embarrassing and uncomfortable situation for the newly dead. Since it isn’t described in that way, then we can’t possibly stay the same. Either we all suddenly learn from our mistakes and use that to transform into loving, sympathetic, empathetic creatures, or we continue to be the same ignorant fools we’ve always been. If we are still fools, we somehow must be kept isolated from all the other ignorant fools. If we were not kept isolated, these others would probably make our life after death pretty much the same as life before death.

If we remain basically the same, then what is the point of reincarnation in the first place? I thought the idea was to progress through diverse experiences. According to Mr. Van Praagh, nobody is there to judge you except yourself. In some cases, he describes the process by which souls review their life in order to learn lessons and prepare for the next life. Others may be there to help and encourage you, but it is essentially up to you to figure things out. This sounds a lot like life as we know it now. I think we call it therapy, or sometimes an intervention.

Can we read each other’s thoughts after death? If so, how could there be any form of games or competition if everyone had total access to the thoughts of others? Is paradise devoid of games and fun? Is it devoid of sarcasm and the kind of humor that often comes from poking fun at others, which is usually the best kind? Are extraterrestrials telepathic? If so, we could ask them what they do for fun other than experimenting on humans and cows. Maybe they are already dead, which is why it is so hard to catch one of them.

Mansion in Heaven

Mansion in Heaven

Does everyone who goes to heaven get a mansion, as suggested in Ricky Gervais’ movie The Invention of Lying? It sounds reasonable if we have to exist somewhere for all eternity. Of course, it wouldn’t be a real mansion. It would probably be a virtual one that we imagine and create ourselves. If I were a being of energy who could build a virtual mansion or an entire world using only mind and energy, without having to worry about the law of gravity or limitations of space-time, my home would probably be pretty outrageous and constantly changing. I might live in a spherical, gravity-free house with no ceilings or doors and would teleport from room to room. The sun would permeate it from the inside or through windows all around. My garden would have snow fountains and chocolate covered strawberry trees.

Of course, if my home was so unusual that it scared everyone else away, I might have to moderate my designs to accommodate the tastes of others. But compromise and trendiness are traits we already exhibit too much of in our daily lives. Do we have to conform with everyone else even after we are dead?

In a virtual world, people should be able to visit each other’s virtual homes and, when they see something they like, be able to copy it. So, we would all end up becoming collectors of the ideas and designs of others. Would this become a form of competition? If so, would there be some kind of intellectual property rights that would guarantee us at least some form of credit for our creations? Would we care? If we don’t care what others think, what would drive us to create in the first place instead of just keeping it tucked inside our own thoughts, assuming that privacy is even possible? Do we all have to share everything after we die, including our thoughts? Would it drive us crazy? Would it turn us all into an interconnected selfless mass of souls connected for all eternity like the Borg Collective from Star Trek? Maybe we should try this all out in a virtual computer game before we die, so we can set our expectations and avoid excessive shock.

Star Trek Virtual Reality Holodeck

Star Trek Virtual Reality Holodeck

On the other hand, if everything is mind and energy, wouldn’t we be able to create our own visions on top of everyone else’s? For instance, if my wife were to decorate our virtual home with her favorite art and nick knacks, couldn’t I simply visualize a totally different form of art on the walls and a room stocked with my favorite things? When I walk into a room, I would want my wife’s decorative pillows to vanish from the couch or the bed or the chair or wherever else she decided to stick her ubiquitous, color-coordinated piles of fringy fluff. Since objects would be nothing more than creations of mind or energy rather than matter, nothing would be permanent and could be perceived differently by everyone. I think this kind of virtual reality is what Google Glass and Facebook’s Oculus Rift will eventually be able to do here on Earth, so maybe we’ll figure out how well this works soon enough.

For that matter, she might visualize herself differently from the way I visualize her. And the words I speak or think could be translated differently so that she hears what she wants to hear instead of the inappropriate babble that is likely to come out of my mouth or brain. She might perceive herself in her favorite stylish J. Crew clothes while I mentally picture her in her sexiest underwear or swimsuit. Of course, she would know it once she read my mind, but would she care? Would I even care without hormones and a body that is able to get sexually excited? Would we all want to dress in drab blue Mao clothes or Men-in-Black suits just to avoid bringing up any memories of the hot sex we are no longer able to enjoy? Or would sex become something that is based purely on mental stimulation? Wouldn’t it be ironic if we could now read the minds of our lovers and know exactly what they want, how they want it, where they want it, when they want it, and be able to materialize in any physical form desirable with any kinds of toys imaginable, yet be unable to act upon our desires!

The more I think about it, heaven or life after death sounds less like paradise and more like the candy store from hell–it looks good, but you can’t touch the merchandise or do anything fun! I think I would prefer Earth with virtual reality technology. After I die, I think I will have to make a special request: send me back to Earth again, pleeease!