GoPro in freefall: Storage prices continue to hit camera maker

GoPro is coming under increasing pressure. In a mandatory filing with the US Securities and Exchange Commission (SEC), the camera manufacturer has disclosed significant doubts about its continued existence. At the same time, GoPro warns that lenders could interpret the notice as a violation of existing credit agreements. The company states it is already in talks with the affected financing parties.

For upcoming quarters, GoPro itself expects to fail to meet certain debt covenants. In the event of a breach of contract, outstanding amounts could become immediately due. GoPro cannot assure that it will then have sufficient assets to repay, the SEC filing states.

The latest quarterly figures make the tense situation clear: In the first quarter, GoPro's revenue fell by 26 percent year-on-year to 99 million US dollars, and camera sales decreased by 29 percent to around 313,000 units. The margin collapse from 32.1 to 4.3 percent was particularly drastic. With quarterly revenue of 99 million dollars, GoPro already lost 57 million dollars in ongoing business. The net loss amounted to 81 million dollars.

Storage prices put pressure on margins

The situation is exacerbated by the tense situation in the storage market. In its explanation of the quarterly figures, GoPro points to rising storage costs and a difficult supply environment for storage components. Both have burdened the economic viability of previously expected unit numbers and contributed to a special charge of 24.5 million dollars. According to GoPro, prices for storage components rose by 80 to 115 percent in the last week of the quarter. According to the company, without this special charge and the sale of hard-to-sell inventory, the gross margin would have been around 31 percent instead of the reported 4.3 percent.

In addition to higher costs, GoPro is also affected by lower availability: Storage suppliers announced production cuts in April for the storage used in GoPro products, which is why the camera manufacturer lowered sales forecasts for certain products.

GoPro's problems began long before the current storage crisis, as the camera manufacturer has been struggling with declining demand for years. GoPro had already reduced its workforce by about a quarter in 2024, followed by another restructuring plan in April, which is expected to eliminate 23 percent of jobs. Whether the latest foray into new product categories will be enough to get GoPro back on track remains to be seen.

In light of the escalating situation, GoPro is examining strategic alternatives, including a possible sale or merger of the company, according to the SEC quarterly report.

(kbe)