Projected lower sales and profits for the fourth quarter drove GoPro’s stock down “a double black diamond ski path” after the company’s late Tuesday warning, Investor’s Business Daily said.
The video device company’s stock plummeted 23% in after-hours trading following the release of preliminary financial results for the fourth quarter and year-end. Fourth-quarter sales of its video capture devices are expected to fall 31%, to $435 million, from a year ago. Analysts polled by Thomson Reuters were projecting sales of $512 million.
“To better align resources to key growth initiatives,” GoPro also announced it would cut its 1,500-employee workforce by about 7%. The company estimates it will incur approximately $5 million to $10 million of restructuring expenses in the first quarter of 2016, substantially all of which will be severance costs.
Non-GAAP gross margin for the fourth quarter, excluding the impact of price protection and a charge of between $30 million and $35 million to cost of revenue for excess purchase order commitments, excess inventory, and obsolete tooling, is anticipated to be between 44.5% and 45.5%. Excluding these factors, non-GAAP gross margin for the fourth quarter of 2015 is anticipated to be between 34.5% and 35.5%.
GoPro will post its earnings results on Feb. 3.
GoPro shares went public at 24 in June 2014 and hit a record high of 98.47 in October 2014.