Its durable cameras might be popular with folks taking action footage, but GoPro(NASDAQ: GPRO) hasn't been a great success as a stock. After a sustained period of excitement following its 2014 IPO, investors have largely shunned the company.
Might that change with a recent deal? The stock has been showing a few signs of life since management announced news of a distribution arrangement with one of the top conglomerates in the Asian tech sector.
Big(ger) in Japan
In mid-July, GoPro announced that it had entered into a distribution partnership with SB C&S, a unit of sprawling Japanese tech conglomerate SoftBank Group(OTC: SFTBF). SB C&S will distribute the full range of GoPro cameras and accessories throughout Japan. These will appear on shelves of SoftBank retail stores in addition to a pair of busy nationwide electronics retailers, Yodobashi and Yamada.
GoPro added that, as part of the distribution deal, SB C&S will also provide certain stores with GoPro product displays. The Japanese company will also deploy training and support services for the goods.
That's encouraging news, hence the bump in GoPro's share price when it hit the headlines. The reaction might have been more positive if management had supplied more information. As it is, we don't have any kind of fix on the financial particulars of the arrangement. And while SoftBank is as large a presence on the Japanese retail scene as it is an investor in tech companies, it's oddly difficult to get a fix on how many domestic retail stores it operates.
As for the two outside retailers, Yodobashi and Yamada both operate a clutch of outlets in Tokyo and other locations in the country. Both are well-known to -- and popular with -- Japanese consumers. Yodobashi's flagship store is a nine-story monster in the capital city's central Akihabara neighborhood.
Potential still limited
On its own, this deal probably won't reverse GoPro's revenue slide over the past few years -- the company has seen its top line erode from $1.16 billion in 2021 to barely over $1 billion last year. I feel it's admirable that management has been able to push annual sales above the $1 billion mark for what's essentially a niche set of products and services. Like others, though, I think GoPro might be at or near its ceiling in terms of its core addressable market.
At least it's getting help where it needs to. Of its three regions -- which also include Americas, and Europe, Middle East and Africa -- it drew the least revenue from Asia and Pacific in the first quarter (less than $27 million, against $52 million for EMEA and nearly $77 million for Americas). That's also where it suffered the most precipitous drop during the period, with a 31% year-over-year swoon. Americas fell 14%, while EMEA actually grew (by 13%).
Again, while the SoftBank deal is almost inarguably a positive for GoPro, it probably isn't enough of a positive to change anyone's sentiment on the latter company's stock. That sentiment includes my own; GoPro's market is limited, international as it may be, and while this remains so, the company's potential will be limited, too.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
