GoPro's big problem
It was once a Wall Street darling...
Remember GoPro (GPRO)?
It was a Wall Street darling…
But have you seen its chart lately?
It’ not pretty, as I recently pointed out on X…
I asked chief analyst Stephen McBride what happened with GoPro…
He said the red flag from the beginning was that it was a “feature, not a business.”
Stephen:
GoPro created a whole new category with its tough, mountable cameras that captured incredible action shots
But as smartphone cameras became astonishingly good and more durable, the need for a dedicated action camera shrank. The “feature” of a great portable camera was absorbed by the ultimate platform: the smartphone in your pocket. Drone companies like DJI also started building incredible cameras directly into their products.
The result was GoPro’s stock collapsing 95% from its highs.
Some of the most seductive disruptors are built around a clever new feature, not a defensible business. The innovation is real, but it can be easily copied by a larger player.
Imagine a startup building a fantastic photo-filter app that goes viral. This is a feature.
What’s to stop Apple (AAPL) from building the same functionality into the iPhone? Or Instagram from rolling out a similar filter set? The company in question has no moat. It’s a tenant in someone else’s ecosystem.
That’s why Stephen and his coeditor Chris Wood hunt for platform technologies.
A platform technology is the foundation of an industry or a whole new way of doing things. It often provides the infrastructure or ecosystem that enables other entities (such as developers, businesses, or users) to create and grow.
Take Nvidia (NVDA). “It doesn’t just make a cool chip,” Stephen says… “Its CUDA system is the platform for the entire AI revolution. Amazon Web Services provides the cloud infrastructure half the internet runs on. These companies have deep, wide moats.”
Thanks for reading,
Chris Reilly
Executive Editor, RiskHedge