GPRO - Best Stock to Buy Right Now: Peloton vs GoPro
2024-05-06 07:05:00 ET
There's one unfortunate similarity between exercise equipment maker Peloton (NASDAQ: PTON) and camera maker GoPro (NASDAQ: GPRO) -- their stocks have lost huge amounts of value over the past few years. GoPro is the "better" performer, only down around 85% from its high water mark in 2021. What's going on with these two companies and is it worth stepping in to catch either of these falling knives?
On the surface, GoPro and Peloton seem to be starkly different companies. GoPro's cameras are nothing like Peloton's exercise equipment. But if you step back and think at the company level, they are both focused on making niche devices. Peloton's equipment is only attractive to people who work out and GoPro's super tough cameras are largely used by people who do extreme things (and want to film it). In some ways, it would seem more fitting if these consumer discretionary companies were part of larger conglomerates since that would add diversity to their product lineups.
There's another interesting similarity in the business model shifts the two companies are making. Selling devices is fine, but can lead to lumpy results. When Peloton's connected exercise bikes were all the rage, the company couldn't keep up with demand and there were waiting lists. Now that the fad is over, demand levels just aren't the same anymore. GoPro's devices are a bit more niche, but they still have to deal with product cycles (new cameras can lead to a quick bump in sales that fades out over time) and seasonal demand variations (the holiday season).
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Best Stock to Buy Right Now: Peloton vs GoPro