GoPro (GPRO) Given "Sell" Rating at Dougherty & Co

GoPro CEO Nick Woodman introduces the new foldable Karma drone during a press event in Olympic Valley California on Sept. 19 2016

Before U.S. stock markets opened, GoPro said it will cut at least 20 percent of its workforce, and go from 1,254 employees to less than 1,000 workers. We're now hearing that the company could be trying to sell itself, but would anyone buy GoPro in its current state?

In its statement today, GoPro also cited the hard regulatory regimes in the USA and Europe as the reason why it doesn't think the drone market will be lucrative in the long term. "GoPro is committed to turning our business around in 2018".

Shares of GoPro plunged 23 percent in morning trading Monday on the news. The company will continue to operate independently if it ends up being acquired by another company, but it isn't clear as to exactly how much GoPro wants for its sale as of yet.

Citing sources familiar with the matter, CNBC reports that the action camera maker has hired JPMorgan Chase to help it explore the possibility of a sale.

The company was already forced to announce a price cut on December 10 for its core camera product, the HERO5, due to weak pre-holiday sales.

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Woodman said GoPro's results were impacted by several factors, including a reluctance of consumers in November to purchase the company's Hero5 Black camera at the same price it cost when the camera was launched in late 2016. The company now estimates its fourth-quarter sales at about $340 million, while it previously had been expecting about $480 million in sales. It's worth noting that Canon Inc (ADR) (NYSE: CAJ) was reported Friday to be pursuing $3.53 billion in acquisitions over the next three years.

Nick Woodman, the CEO of the action camera manufacturer stated that the company would consider a sale or partnership with another company, but the firm's intention would be to remain independent. Wall Street analysts had earlier forecast GoPro to report sales of $472 million for the quarter.

"Although Karma reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market", says the GoPro statement.

When GoPro launched the Karma, its first drone designed for the company's cameras, in September 2016, it was already facing an uphill battle after production delays and a market dominated by drone maker DJI.

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