May 11 - GoPro said on Monday that it plans to evaluate a range of strategic options, which may include a sale of the company or a merger, after receiving several unsolicited strategic inquiries. The disclosure followed a consulting engagement announced roughly a month earlier in which GoPro retained Oliver Wyman to explore new arenas for its technology within the defense and aerospace markets.
The company's statement noting the strategic review and the board's authorization to hire a financial advisor sent GoPro shares up by more than 27% in after-hours trading.
Separately on Monday, GoPro released its results for the first quarter ended March 31. The firm reported a wider adjusted loss compared with the same period a year ago and a decline in total revenue, with hardware, subscription and service revenue all falling during the quarter. For the quarter, GoPro recorded a loss of $0.35 per share, versus a loss of $0.12 per share a year earlier.
Corporate changes earlier this year included the appointment in February of Brian Tratt, an insider, as chief financial officer, replacing Brian McGee. As of the last close, GoPro's market capitalization stood at $224 million, according to data compiled by LSEG.
Key points
- GoPro has launched a formal strategic review that could culminate in a sale or merger after receiving unsolicited inquiries - an action that impacts the company's ownership and M&A prospects.
- The company previously engaged Oliver Wyman to identify potential applications of its technology in defense and aerospace markets, and that work preceded the unsolicited approaches.
- Financial results for the first quarter showed a wider adjusted loss and a decline in total revenue as hardware, subscription and service sales fell, underscoring near-term operational headwinds.
Sectors impacted - Consumer electronics, defense and aerospace, and the broader mergers and acquisitions market.
Risks and uncertainties
- There is no certainty that the strategic review will lead to a sale or merger; unsolicited inquiries do not guarantee a transaction will occur - this affects shareholders and potential strategic partners.
- GoPro's recent financial performance showed a wider adjusted loss and falling revenue across hardware, subscription and service lines, which may complicate valuation and deal negotiations.
- Board-level decisions and the process of engaging a financial advisor introduce timing and execution uncertainties for any potential strategic outcome.
GoPro's announcement ties together its pursuit of new market opportunities through consulting work and the immediate market response to potential strategic alternatives. The board's decision to bring in financial advisory support formalizes the company's review process while the reported quarterly results highlight the underlying revenue and profitability challenges facing the business.