By James DeRuvo (doddleNEWS)
The next step in GoPro’s long, painful slide is to be purchased outright by one of its competitors. After GoPro CEO Nick Woodman stated that he’d be open to a potential sale of the company,we’re hearing that their top competitor, Chinese electronics giant Xiaomi may be lining up a bid to do just that. Can the company that is part of the reason why GoPro is on the ropes turn the iconic action camera company around, or will they just buy up the patents and let it die?
The story comes from Wall Street watch dog site The Information, which likened GoPro’s stock troubles to “the thrill seeing mountain bike rides from the perspective of one of its action cameras just before taking a plunge.” GoPro’s market capitalization of about $700 million, and its shares are down 36% in trading so far this year.
Consequently, the report states that Xiaomi would make an ideal candidate to buy the beleaguered action camera company, who’s stock has dropped to around $5 a share, nearly 90% less than its $90 per share IPO in 2014. Moreover, drone company DJI Global was also being pitched by bankers to take over the company, but according to the report, the drone company apparently “saw no value in the company” for them. OUCH. I’m not sure if that’s a legitimate appraisal of GoPro or a lingering cheap shot after a bitter partnership divorce.
Notwithstanding, with 15 times the revenue of GoPro, Xiaomi could make an ideal white knight to come to Nick Woodman’s rescue. Familiar with the platform, Xiaomi’s camera division Yi recently took over the JumpVR 360 camera project that was once a partnership between GoPro and Google. Yi has also placed a sizable dent in GoPro’s lead in market share, coming out with competing action cameras that are just as capable as the GoPro Hero, but at a fraction of the price. Ironically, the news of Xiaomi’s potential rescue triggered a brisk uptick of 9% in stock value as of yesterday.
The report indicates that GoPro’s sale value based on what HP paid for Palm back in 2010, a sale of GoPro could go for as high as $1 Billion, $300 million over its current market value. However, with a lack of competitors, Xiaomi could be in the driver’s seat to get GoPro in a bargain buyout, rather than overpaying to acquire its assets.
But the final decision on GoPro’s fate is going to rest with its CEO and major shareholder, Nick Woodman, who controls 3/4s of the board’s voting power, according to the report. Woodman, who created the company out of his van, may not be willing to let the company go for a song in order to rescue it. Woodman has stated as early as January that he would be open to some sort of sale. “If there are opportunities for us to unite with a bigger parent company to scale GoPro even bigger, that is something that we would look at,” Woodman said.
That doesn’t sound like a CEO is looking to get out, but wants to find someone who can provide the money to weather the storm, and Xiaomi could be that someone. But the question is, could Woodman survive the buyout?