How GoPro’s Founder Destroyed $10 Billion In Value
Today's newsletter explains the rise and fall of GoPro, including botched product launches, a disastrous drone recall, and a CEO unwilling to remove himself before it was too late.
GoPro’s stock shot up 25% after the close on Monday. The company didn’t announce an innovative new product, record revenue growth, or increased profit margins. In fact, it was the opposite. GoPro reported a 26% decline in quarterly sales and a net loss of $80.8 million, yet the stock still popped after management said it has received unsolicited inquiries about a potential sale or merger.
This is welcome news for anyone crazy enough to own GoPro equity. The same company that invented the action camera category from scratch, riding the YouTube and social media wave to an $11 billion valuation, now trades at a market capitalization of $195 million after a decade of mistakes and bad judgment.
The company has dealt with botched product launches, a failed media pivot, a disastrous drone recall, and better-funded Chinese rivals, but GoPro’s biggest problem over the last decade has been that its unique ownership structure has granted its founder nearly unlimited power to destroy shareholder value. And now that we have the benefit of hindsight, GoPro is a great business case study in the red flags to look for when investing in a founder-run, public-market business.
Let me explain…