GoPro IPO Priced At $24 A Share, Camera Company Valued at $3 Billion Upon NASDAQ Debut

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Wearable sports camera maker GoPro Inc.'s (GPRO) initial public offering was priced at $24 per share, an underwriter said, valuing the company at up to $2.96 billion, according to Reuters.

The GoPro IPO raised around $427.2 million, after the offering of 17.8 million class A shares was priced at the top end of the expected range of $21 to $24 per share, Reuters reported. The San Mateo, California-based company sold 8.9 million shares in the IPO, while the rest were offered by selling stockholders. The lead underwriters of the IPO are J.P. Morgan, Citigroup and Barclays.

The company known for its tiny cameras used by extreme sports fanatics, is set to make the largest stock debut by a consumer-electronics company in over two decades with its initial public offering on Wednesday night. GoPro will be one of nearly 20 companies aiming to make their market debut this week when it begins trading on the NASDAQ Thursday. 

Financial forecasters predicted that, with help from early investors, the company could sell a staggering $427 million in stock at its debut, a sum that would make it the largest consumer-electronics IPO since Duracell International raised $433 million in funds in 1991, according to the Wall Street Journal.

GoPro cameras have become increasingly popular with athletes and adventure-seekers who've made a habit of attaching the accessory to their helmet or vehicle and capturing the experience on film. Riding this wave of success, the company has taken over the market and last year became the No. 1 selling camcorders in the U.S. both by sales and units, according to GoPro’s IPO prospectus.

The San Mateo, California-based company has yet to make money from the video content, but has impressed with its ability to appeal to so many young viewers who GoPro expects will eventually make the company a success. Porter Bibb, of Mediatech Capital Partners LLC, told Bloomberg that even if GoPro is unable to glean revenue from its videos, the notion of so many people attaching the cameras to their helmets works essentially as free advertising.

“This is a very intelligent approach because it’s not monetizing the content, per se, but the audience that they’re reaching,” Bibb said. “They’re in the right space now in terms of valuation.”   

Even though the company’s profit increased by 88% last year, up to 61 million, and revenue climbed to $986 million, an 87% from 2013, questions remained if GoPro’s shares are priced correctly, the Journal reported. Initial speculation estimated a share price of $21 to $24, indicating the valuation could have been as high as $3.6 billion, a number 25 times GoPro’s projected earnings in 2015.

Most impressive to Paul Meeks, a technology analyst at Saturna Capital, was that GoPro has been able to carve out a niche in a gadget world dominated by Apple Inc. and Samsung Electronics.

“Over time, even though it looks like they have a great product now, it looks like a commoditized hardware vendor,” he told the Journal Wednesday before the IPO debut. “I just don’t know, over time, if it can’t be copied by Apple (NASDAQ:AAPL) and Samsung (KRX:005930) and the like.” 

 

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