The rise and fall of GoPro: From $11 billion to penny stock

GoPro went from 67% of the global action camera market and a valuation of over $11 billion to today being something that the stock market really doesn't care about with less than a $1 share price. And last year they burned over $100 million in cash. So what does this wild ride of the GoPro Corporation tell us about business and what lessons are there for us as business owners? I'll tell you the whole story and how it all happened. In this video. Hi, my name is Michael. I love making videos to teach people about business through the lens of fascinating stories like this one about GoPro. If you'd like that kind of stuff, I put together a list of the 10 ways that I commonly see businesses fail, and it's down a link in the comments below. So click on that and you can subscribe and get it for free. So the story of how we got here and the wild ride of GoPro goes back to surfer Nick Woodman. And he was a surfer, right? He hung out on the California beaches and he wanted to be able to take action shots of he and his friends out in the water doing adventure sports. Sports. So he went and solved his own problem, and the way he did that was by creating the very first GoPro. And it was a plastic-cased 35mm camera that would fit on his wrist and allowed everybody to basically go professional. You could take this little thing and shoot action shots of what you were doing. And the eventual downfall of GoPro was actually started back at this very early days around charismatic founder Nick. You see, he went in, basically hustled his way up and down the California coast going from surf shop to surf shop, talking them into buying the GoPros from him. He was your kind of prototypical hustler founder visionary going to make something happen, and he pulled it off by basically sheer force of will. And Nick's like a lot of entrepreneurs who realized if you want to pull off things that are really truly astounding, you can't do it without hard work. And Nick, well, he had that in spades. And after those first few months of hustle, Nick had done something pretty magical. I mean, working out of his home, he had sold a few thousand of these devices to surf shops up and down the coast. And as the case with most hugely successful entrepreneurs, Nick's hustle ran into, well, great timing. And the great timing was that digital started to come to this action camera market. The digital revolution came for GoPro, and basically that meant that he could go from film cameras to early on starting to do VGA, so low-resolution video and that sort of thing. And over the years, up through 2010, eventually the GoPro cameras that were coming out could eventually do 4K video. and you as an individual could, in the palm of your hand, reproduce a lot of what people were doing with professional cameras at the time, except you didn't need to have a professional camera crew with you. And the other thing that helped GoPro was it was perfect timing. You see, in the early 2000s, we started to see the rise of YouTube and also the rise of people wanting to share their activities online and showed themselves skiing and surfing and cycling and all these types of things. Well, if you're doing an action sport, Right? You want an action camera to go with you because your cell phone certainly can't do it at the time and nobody wants to carry around a 35mm camera. So what perfect device to have than a GoPro that could be there as part of the action with you and rugged enough to survive it. And then you as a person would take that video and go put it on YouTube or, well, that was basically the video platform at the time and go share it with the world. And for GoPro, this was a perfect dynamic. You had a situation where people were using the devices, they were having a great amount of fun, and they were turning around and showing all their friends them using the device. In other words, GoPro was getting super free advertising from their users who were delighted using them, and the products caught off like wildfire. In 2011, they did about $284 million in revenue. That number more than tripled over the next 2 years, and by 2013, they were doing nearly $1 billion in revenue for the GoPro Corporation. And unlike a lot of tech startups at the time, they were profitable. In other words, they were making money. It was kind of a rare thing. The company IPO'd in 2014 to a ton of fanfare. The stock opened at $30 a share and popped it over 30%. People wanted to buy up GoPro shares, and the business was valued at nearly $4 billion. And at this time, GoPro had an amazing story. People positioned it as like a Red Bull meets Apple story, right? Tech meets adventure. And that story was one that investors ate up. And over the first year of the company being public, the valuation ballooned to nearly $11 billion. And the story was getting backed up. The Hero 4 camera from GoPro in Q4 of 2014 did $639 million in revenue by itself. And in the end, everybody Everybody believed the hype, not just the stock market, but the folks inside the company as well. Nick Woodman, he orchestrated himself to have the highest paid CEO pay package in that particular calendar year with a pay package including the stock grants worth over $284 million. And the company ballooned from 50 employees that was once a scrappy small team to over 1,500. And so did the vision. Vision was that the company would grow beyond cameras and become this kind of media empire. But as is the case with a lot of companies, when they reach this level of success, It's easy to chase shiny objects and to forget what roots you came from. And this is when the cracks started to show in the foundations of the company. And there were two bad things on the horizon coming for the GoPro Corporation. The very first one was the rise and basically evolution of smartphones. See, Samsung and Apple, they were hard at work making their flagship phones even better. And the second thing going on was the rise of cheap knockoffs from China. Heck, I bought one of these things. It was a GoPro at basically one-third the cost, and it did most of what I wanted. and these things would come in at $50 to $100 when a GoPro was priced at $400. And the management team for GoPro was not stupid. They saw these things coming and they saw that kind of the casual end of the market was getting— well, they were getting beat out in those areas by the smartphones and the cheap copycats. So Nick and his team put together an answer for that. And the idea was to shrink down the GoPro to a very small form factor and a very simple one. And they called it the Hero 4 Session. The idea being you could operate the whole thing with just one button in a teeny tiny form factor. But the Session flopped. The first thing was GoPro priced it at $399, which was the same price as their full-fledged Hero 4 model. So people would ask, why would I buy this simplified Session that only has one button and limited features when I can get a full-fledged model for basically the same exact price? And this confusion and the lack of functionality, it weighed down the Session greatly. People didn't want it. And eventually the company had to chop down the price from $399 to $299 and then eventually $199 just to get them out the door. And this was the first time that GoPro had actually let down retailers. And I remember going around to stores at this time, and seemingly every single store that I would go into back in the 2010s had a GoPro basically merchandising display right by the door. This is a product that just hadn't lost for over 15 years, and retailers had trusted that brand. But now with the Session, retailers started to question, well, Should I be betting so much of my retail space on the GoPro business? And by 2016, the flagship phones from Samsung and Apple, they were pretty darn good. They started to bring 4K and image stabilization and all that kind of stuff that you used to have to buy a GoPro to get. Well, now if I was a casual user, which I am, you would just get that stuff with your phone and there's no need to go buy a GoPro at all. And 2015 was a horrible year for the company. They lost money and sales went down by 31%. And trying to react to that, they laid off 7% of their staff, the first layoff in the company's history. And now the company tried to turn itself around, doing what I call thrashing, where you try a bunch of different stuff to try to evolve things and deal with the problems that the company is facing. But in this case, GoPro's fate was sealed years before, and they had missed the window when they would really have an opportunity to protect their franchise from these attacks from the bottom, from these cheap Chinese knockoffs, and from the smartphones coming for their business. And this thrashing involved a number of different things where they were trying to save the company and find something new to bet on. The first one was a drone experiment. They went and bought a drone startup and started to release their own version of DJI's drones, basically. And it was called the Karma. It was $799, and it was priced exactly at the same as what you would buy a DJI drone for at the time. And everything went okay except for the quality problems. And one of those was that the Karma drones, they had a habit of falling out of the sky due to a faulty battery connector. And in fact, GoPro had to recall 2,500 of the drones the entire amount of their production run and get them repaired. And it never basically recovered. DJI took the lead in the drone business and eventually GoPro shuttered the entire division and they lost $375 million on this drone experiment while DJI ate their lunch. And while you could at least explain the drone experiment a bit because GoPro had always been a hardware company, the next big bet was kind of hard to make sense of. And the thing the company tried was to become a media brand with the idea that Basically, GoPro would produce all this content based on their own original footage and their own original ideas. They hired all these people from kind of media and production houses, and then they would take and combine that with people's footage that they were using in the wild, and they would produce all this content that people would want to buy and advertisers would want to put their name around. But the problem was advertisers really didn't get it. They didn't see how somebody kind of thrashing around or swimming in the ocean or riding a bike really fast was the right place for them to advertise. Tied our Hershey's chocolate bars. And so eventually the media division never really showed any kind of profit. It never really found actually any revenue either. And eventually GoPro laid off the entire division, giving up 200 employees and shutting down the venture entirely. And by 2018, the downward spiral of the company was pretty much sealed. They had missed the window to save themselves probably a decade before. The company had lost over half of its market share, dwindling from a high of what was 70% at its peak to below 30% market share. And all along, the company kept losing money. And in 2024 alone, the company lost $430 million. That is nearly half a billion dollars. That is not a typo. And despite doing over a billion dollars in sales in the past few years, the company's stock is valued at less than $100 million, which is basically penny stock territory. And in 2024 alone, they burned over $100 million in cash, and it's starting to run out. But their market basically undercut by super cheap Chinese competitors and coming from the top down by basically going from this thing that need to be a standalone thing, the GoPro camera, to being a feature of smartphones. Basically, the fate was sealed for GoPro years ago. And today, well, what's left is just a shadow of its former self. And that shadow is losing money. So, and in this, it's very easy to see how companies that basically grow very quickly through technology disruption and opportunities, well, those opportunities can close really quickly. And that's exactly what happened to GoPro. All right. That's the story of the company, rise and fall, and lessons we could learn from it. Let me know what you think below. Do you still have a GoPro? I never did. I bought one of those cheap knockoffs. All right. Let me know in the comments below. Talk to you soon.