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GoPro's Equity Story
GoPro's Equity Story
GoPro's Equity Story
Table of Contents
Recent Capital Markets Activity
Online Camera Market Overview
Company Considerations
Share price performance
Recent Corporate Actions (eg. M&A, news
announcements)
Operating Performance
Valuation
Executive Summary
People film content with social currency which is shared -> more people view content and are
then compelled to buy a GoPro which repeats
As a media platform it could have the ability to curate the best content and gain
advertising/royalties etc.
The market seems very optimistic about GoPros media platform opportunity
which is at least 2-3 years from materialising. Based on our valuation analysis, the
company is not trading on fundamentals:
Based on forecasts, a 5-year discounted cash flow model yields a per share valuation of $21.30
GoPro currently trades at $68.2 on NYSE an implied 3x market premium to the fundamental
DCF value
Looking at a trading multiples valuation we see that GoPro has a 286% market premium on its P/
E multiple and an 88% premium on its EV/Sales
It is far too early for long-term investors to be able to tell whether GoPro will have
staying power or will be out-competed by larger counterparts like Sony, Google,
or Apple.
CAMERA MARKET
OVERVIEW
100
2000
25.00%
5.00%
20.00%
4.00%
15.00%
3.00%
10.00%
2.00%
5.00%
1.00%
0.00%
0.00%
2011
2012
camcorder market
2013
camera
Market
50
1000
0
0
2011
1,000.0
Camera market
Camcorder market
6.00%
150
3000
200
2012
GoPro
2013
total
Revenue by Geography
(1000s)
500.0
0.0
2011
Americas
2012
EMEA
APEC
2013
total
Total (1000s)
GoPro
534
340
subscribers
dcshoes xtreme
vid
Subsrcibers (mil)
2.3
2.2
2.1
2
1.9
1.8
1.7
1.6
1.5
232
14%
50%
36%
Yes, I have
seen GoPro
content before,
No, but I have
heard of
GoPro before,
Competitive Landscape
Cameras
Sony
Garmin
Polaroid
Ion
JVC
Panasonic
Drift
Consumer
iRobot Corp
Lululemon
athletica
Chipotle
Mexican Grill
Michael Kors
Holdings
Hain Celestial
Group
Annies inc
Online
RedBull
Discovery
Channel
COMPANY
CONSIDERATIONS
Advertising opportunities
Licensing (Getty images platform)
Software and studio initiatives (investments in video editing)
Secured deals with Virgin Atlantic, Microsoft Xbox and BMW iDrive
GoPro market share will fall as low end category growth increases.
Action cameras will only be adopted by so many people.
Google glass style technology and better mobile phones will limit mainstream
sales.
GoPro suggests mobile might actually be complementary so this is
contentious.
To break APAC market a lower cost unit needed which will depress
margins
Likely product model similar to Apple Ipod touch/nano/shue
200
180
160
Garmin
Sony
Apple
Netgear
Nike
High $70.9
Tesla
UnderArmour
140
120
100
80
60
40
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
3.0
Sales
Growth (%)
36
35
2.5
EBIT (1000s)
14%
250
11%
200
150
12%
13%
201
15%
275
16%
14%
235
12%
170
10%
134
8%
6%
100
4%
50
2%
0%
2014E
2015E
2016E
2017E
2018E
27
2.0
2.0
25
1.7
1.5
20
1.3
18
17
17
15
1.0
10
0.5
5
0
2014E
2015E
2016E
2017E
2018E
Growth in sales
300
EBIT margin
2.3
30
40
2.8
Media Platform could prove lucrative if online viewership continues its growth
The two main revenue sources we forecast for this business model is advertising and licensing
GoPros demographic is 18-34 YO which is the most sought after from advertisers
Based on a forecast 4 billion video views at $10 and 40,000 videos sold at $500, incremental $60
million annual revenues can be achieved from the media opportunity.
Number of views
Billions
1
2
3
4
5
6
7
$6.00
$6.00
$12.00
$18.00
$24.00
$30.00
$36.00
$42.00
100
200
500
1000
10,000
$1.00
$2.00
$5.00
$10.00
20,000
$2.00
$4.00
$10.00
$20.00
30,000
$3.00
$6.00
$15.00
$30.00
Number of videos sold
40,000
$4.00
$8.00
$20.00
$40.00
50,000
$5.00
$10.00
$25.00
$50.00
60,000
$6.00
$12.00
$30.00
$60.00
$14.00
$14.00
$28.00
$42.00
$56.00
$70.00
$84.00
$98.00
2500
$25.00
$50.00
$75.00
$100.00
$125.00
$150.00
$16.00
$16.00
$32.00
$48.00
$64.00
$80.00
$96.00
$112.00
5000
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
2014E
2015E
2016E
2017E
-0.63x
-1.11x
-1.46x
-1.81x
69
56
-34
-194
-395
2013A
2014E
2015E
2016E
2017E
2018E
138
134
134
130
129
141
124
Inventory Days
Receivables Days
74
66
62
59
56
98
53
51
72
78
82
81
86
88
2017E 2018E
Sales Growth
Americas
EMEA
APEC
Total
3000000
R&D Spend
$000s
80000
60000
40000
20000
0
2010
Net income
35%
38%
40%
100000
1000000
42%
43%
192785
164652
150000
1500000
2013
300000
200000
2000000
2012
250000
2500000
2011
118893
30%
140761
20%
91517
10%
50000
500000
0%
2014E
0
2011 2012 2013 2014 2015 2016 2017 2018
40%
2015E
2016E
2017E
2018E
Acquisition History
Announced Date
March 30th 2011
October 2013
Target
Description
CineForm
Codec
Software
$9.9 million
GeneralThings
Web
development
$2.9 million
(content management)
Cost
Founded Date
International
Sales Channels
>150
Geographic Mix
Jan 2011
No. Employees
Youtube
Product Overview
COMPANY VALUATION
EBIT
margin (%)
Tax @ 30.0%
Capital Expenditure
Capex/Sales (%)
Working Capital
Working Capital / Sales (%)
Discount Factor
Terminal Value
Present Value
Enterprise Value (m)
Net Debt as at
Market Capitalisation (m)
No. Shares (m)
Share Price ($)
0
2013
985,737
1
2014
1,335,981
35.5%
2
2015
1,696,251
27.0%
3
2016
2,008,230
18.4%
4
2017
2,349,086
17.0%
5
2018
2,750,466
17.1%
98,703
10.0%
101,450
7.6%
201,151
11.9%
295,247
14.7%
412,150
17.5%
521,674
19.0%
10,900.0
12,844.4
23,738.4
54,953.1
89,202.3
128,692.1
(29610.9)
18325.6
-1.9%
(30435.0)
40079.4
-3.0%
(60345.4)
101775.1
-6.0%
(88574.1)
140576.1
-7.0%
(123645.0)
187926.9
-8.0%
(156502.2)
247541.9
-9.0%
32582.0
-3.3%
(87461.2)
6.5%
(40974.7)
2.4%
(23648.9)
1.2%
(24254.0)
1.0%
(40508.1)
1.5%
94248.5
-43681.3
21794.5
97400.9
165526.3
205814.0
0.8939
0.7990
0.7142
0.6384
0.5707
-39045.96
17414.39
69567.25
105679.21
117456.78
2,851
172.5
2,678
126
21.30
5
Terminal Period
205814.0
0.5707
4,520,624
2,579,892
Market Cap
EV/Sales
P/E
2014
2015
2016
2014
2015
2016
880.44
1.6x
1.4x
1.2x
33.0x
25.8x
21.5x
iRobot Corp
1076
Garmin Ltd
11026
8154
2.9x
2.8x
2.8x
19.1x
17.6x
16.5
Lululemon athletica
5644
4946
3.1x
2.8x
2.4x
19.9x
22.2x
18.6
18414
18090
4.7x
4.1x
3.7x
47.9x
37.3x
31.9
16589
15643
4.7x
3.7x
3.0x
25.2x
20.5x
17.3
4303
4927
2.3x
2.0x
1.9x
27.2x
23.2x
21.5
Annies inc
537
520
2.2x
1.9x
1.6x
35.0x
27.9x
27.8
Mean
3.1x
2.7x
2.4x
29.6x
24.9x
22.2x
Median
3.0x
2.8x
2.4x
27.2x
23.2x
21.5x
Mean
3,931
4,359
4,590
1,916
3,462
4,564
Median
3,835
4,577
4,647
1,760
3,222
4,429
7400
Min
1,760
Max
4,647
88%
70%
61%
286%
114%
62%
93%
62%
59%
321%
130%
67%
$34.66
$36.50
$15.24
$27.53
$36.30
# of shares
126
Share price
$31.26
Valuation Commentary
The market seems very optimistic about GoPro and is not trading
on fundamentals
APPENDIX
Income Statement
GoPro
Income Statement
Net Sales
Hist.
Hist.
Hist
Proj.
Proj.
Proj.
Proj.
Proj.
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
234,238.0
526,016.0
985,737.0
1,335,981.1
1,696,251.4
2,008,230.2
2,349,086.0
2,750,465.8
COGS
111,683
298,530
623,953
868,387.7
1,051,675.9
1,204,938.1
1,362,469.9
1,567,765.5
SG&A
83,776
173,869
263,081
366,143.5
443,424.3
508,045.2
574,466.3
661,026.3
EBIT
38,779.0
53,617.0
98,703.0
101,449.9
201,151.2
295,246.9
412,149.9
521,674.0
600.0
2,800.0
10,900.0
12,844.4
23,738.4
54,953.1
89,202.3
128,692.1
56,417.0
109,603.0
114,294.3
224,889.6
350,200.0
501,352.2
650,366.2
0.0
0.0
2,781.2
0.0
172.2
1,127.3
0.0
1,143.7
0.0
0.0
2,944.1
0.0
198,370.0
294,291.8
413,293.5
524,618.2
Depreciation
Amortization
EBITDA
-32
-392
-6020
0.0
507.1
7,398.7
38,855.0
54,055.0
97,351.0
94,558.3
Non-recurring items
0.0
0.0
7,374.0
Interest Income
44
46
Interest Expense
Profit before taxes
Taxes
Profit after tax
Discountinued Operations (Profit)
Net income
14,179
20,948
30,751
29,868.8
59,511.0
88,287.5
123,988.1
157,385.5
24,676.0
33,107.0
66,600.0
64,689.4
138,859.0
206,004.3
289,305.5
367,232.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
24,676.0
33,107.0
66,600.0
64,689.4
138,859.0
206,004.3
289,305.5
367,232.7
125,745.0
125,745.0
125,745.0
125,745.0
125,745.0
125,745.0
$0.73
$0.51
$1.10
$1.64
$2.30
$2.92
$0.00
Shareholder information
Diluted weighted average shares outstanding
Diluted earnings per share
0.0
0.0
0.0
$0.00
0.0
$0.00
0.0
$0.00
0.0
$0.00
0.0
$0.00
0.0
52.3%
43.2%
38.3%
36.7%
84.1%
35.0%
2.8%
38.0%
98.3%
40.0%
46.8%
42.0%
39.6%
43.0%
26.6%
Gross Margin
EBIT Growth
Balance sheet
Balance Sheet
Net PP&E
Goodwill & Intangibles
Other intangibles
Hist.
31-Dec-11
Hist.
31-Dec-12
36,485
80,197
60,412
21,724
198,818.0
Hist.
31-Dec-13
101,410
122,669
111,994
21,967
358,040.0
Proj.
31-Dec-14
0.0
173,677.5
156,309.8
33,399.5
363,386.9
Proj.
31-Dec-15
0.0
220,512.7
199,818.4
50,887.5
471,218.6
Proj.
31-Dec-16
34,439.8
261,069.9
240,987.6
64,263.4
600,760.7
Proj.
31-Dec-17
194,290.4
305,381.2
286,118.7
79,868.9
865,659.2
Proj.
31-Dec-18
394,539.0
357,560.6
344,908.4
99,016.8
1,196,024.8
22,440
8,449
0.0
32,111
17,365
0.0
59,346.0
17,365.0
0.0
137,382.7
17,365.0
0.0
223,005.7
17,365.0
0.0
321,730.3
17,365.0
0.0
440,580.1
17,365.0
0.0
Other assets
16,958
32,155
44,087.4
55,976.3
66,271.6
77,519.8
90,765.4
Total assets
246,665.0
439,671.0
484,185.3
681,942.6
907,403.1
1,282,274.3
1,744,735.3
15,782
109,840.0
3,578
129,200.0
60,297
220,595.0
19,702
300,594.0
16,052.4
240,476.6
19,116.1
275,645.1
56,364.9
288,362.7
38,087.0
382,814.7
0.0
341,399.1
56,504.0
397,903.2
0.0
399,344.6
79,352.4
478,697.0
0.0
467,579.2
100,726.7
568,305.9
113,613
6,455
249,268.0
53,315
13,930
367,839.0
53,315.0
18,703.7
347,663.8
0.0
23,747.5
406,562.2
0.0
28,115.2
426,018.4
0.0
32,887.2
511,584.2
0.0
38,506.5
606,812.4
Common stock
Retained earnings
Treasury stock
77,617.0
(80,220.0)
0.0
91,716.0
(19,884.0)
0.0
91,716.0
44,805.4
0.0
91,716.0
183,664.4
0.0
91,716.0
389,668.7
0.0
91,716.0
678,974.1
0.0
91,716.0
1,046,206.9
0.0
Total equity
(2,603.0)
71,832.0
136,521.4
275,380.4
481,384.7
770,690.1
1,137,922.9
246,665.0
439,671.0
484,185.3
681,942.6
907,403.1
1,282,274.3
1,744,735.3
OK
OK
OK
OK
OK
OK
OK
Balance?
Hist.
Hist.
Hist.
Proj.
Proj.
Proj.
Proj.
Proj.
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
24676
Net Income
33107
66600
64689
138859
206004
289305
367233
Depreciation
2800
10900
12844
23738
54953
89202
128692
Amortisation
Change in OWC
-48915
32582
-87461
-40975
-23649
-24254
-40508
-16958
-15197
-11932
-11889
-10295
-11248
-13246
6455
7475
4774
5044
4368
4772
5619
-23511
102360
-17086
114778
231381
347777
447791
Capex
18326
40079
101775
140576
187927
247542
-18326
-40079
-101775
-140576
-187927
-247542
77617
14099
Dividends
113613
-60298
-53315
191230
-46199
-53315
167719
37835
-57165
-40312
90805
159851
200249
41113
-16052
-56365
34440
194290
-16052
-56365
34440
194290
394539
Beginning Cash
Ending Cash
41,113
Financial Assumptions
Hist.
Hist.
Hist.
Proj.
Proj.
Proj.
Proj.
Proj.
31-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17
31-Dec-18
Sales growth
124.6%
87.4%
35.5%
27.0%
18.4%
17.0%
17.1%
47.7%
56.8%
63.3%
65.0%
62.0%
60.0%
58.0%
57.0%
0.0%
0.0%
40.0%
40.0%
40.0%
40.0%
40.0%
35.8%
33.1%
26.7%
27.0%
27.0%
27.0%
27.0%
27.0%
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7,374.0
0.0
0.0
0.0
0.0
0.0
36.5%
38.8%
31.6%
30.0%
30.0%
30.0%
30.0%
30.0%
0.0
0.0
125,745.0
125,745.0
125,745.0
125,745.0
125,745.0
125,745.0
0.0%
0.0%
0.0%
0.0%
0.0%
COGS as % of sales
Annual depr. as % of previous PPE
SG&A as % of sales
0.0%
15.2%
12.4%
13.0%
13.0%
13.0%
13.0%
13.0%
Inventories % of COGS
0.0%
20.2%
17.9%
18.0%
19.0%
20.0%
21.0%
22.0%
Prepaids % of sales
0.0%
4.1%
2.2%
2.5%
3.0%
3.2%
3.4%
3.6%
0.0%
0.0%
1.9%
3.0%
6.0%
7.0%
8.0%
9.0%
0.0%
3.2%
3.3%
3.3%
3.3%
3.3%
3.3%
3.3%
0.0%
20.9%
22.4%
18.0%
17.0%
17.0%
17.0%
17.0%
0.0%
17.1%
64.1%
64.0%
64.0%
64.0%
64.0%
64.0%
0.0%
1.2%
1.4%
1.4%
1.4%
1.4%
1.4%
1.4%
0.0
77,617.0
91,716.0
91,716.0
91,716.0
91,716.0
91,716.0
91,716.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
53,315.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
Cash
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
Revenue forecasts
Revenue Growth
2011
2012a
2013a
Americas
86.5%
77.4%
EMEA
207.0%
97.8%
APEC
275.5%
115.1%
Total
124.6%
87.4%
2011
2012a
168,450
EMEA
2014e
2015e
2016e
2017e
2018e
30%
25%
20%
20%
20%
40%
25%
15%
15%
15%
50%
40%
20%
10%
10%
36%
27%
18%
17%
17%
2013a
2014e
2015e
2016e
2017e
2018e
314,135
557,285
724,471
905,588
1,086,706
1,304,047
1,564,856
51,328
157,587
311,674
436,344
545,430
627,244
721,331
829,530
APEC
14,460
54,294
116,778
175,167
245,234
294,281
323,709
356,079
Total
234,238
526,016
985,737
1,335,981
1,696,251
2,008,230
2,349,086
2,750,466
Revenue Forecasts
Americas
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