GoPro Drone Business Crashes

A Go Pro Hero 3+ camera is seen at the Nasdaq Market Site before Go Pro Inc's IPO in New York City

A Go Pro Hero 3+ camera is seen at the Nasdaq Market Site before Go Pro Inc's IPO in New York City

GoPro Inc (NASDAQ:GPRO) announced that the company will be reducing its workforce due to its struggles during the fourth quarter of 2017. "Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier", Woodman added.

The fourth quarter of 2017 saw the company take in $340 million, significantly less than in previous years. "Our December 10 holiday price reduction provided a sharp increase in sell-through". The company's shares, which earlier dropped as much as 33 percent, pared some losses after the report, declining 11 percent to $6.67 at 1:55 NY. Hostile regulatory environment in Europe and the United States has also weighed upon its decision. GoPro said low margins and a hostile regulatory market in Europe and the US makes the drone market "untenable". Following intense competition and low-profit margins, the company is finding it incredibly hard to make its drone business sustainable. Given the concerns about less expensive alternatives eating away at GoPro's action-camera market share, this price cut is not a good development.

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GoPro's reasoning behind the departure stems from what they are calling an "extremely competitive" drone market. The company says it plans to reduce its headcount in 2018 from 1,254 employees to fewer than 1,000. The current 1,254 employees are expected to go under 1,000 in its workforce.

News broke Monday afternoon that GoPro has hired JPMorgan to explore a possible sale.

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Whether GoPro ends up selling itself or not, it's clear that the company desperately needs new management.

According to CNBC, CEO Nick Woodman is considering a partnership or sale of his company, and has paid for the services of J.P. Morgan Chase to help facilitate it.

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