Options Trade – GoPro Inc (NASDAQ:GPRO) Calls
Tuesday, July 15, 2014

**OPTIONS TRADE: Buy the GPRO Jan 2015 45.000 call (GPRO150117C00045000) at or under $2.80, good for the day. Place a protective stop limit at $1.10 and a pre-determined sell at $6.00.

by Ian Harvey

July 15, 2014

Introduction

The Nicholas Woodman-led company, GoPro Inc (NASDAQ: GPRO) has a lot going for it. Its stock has shot up more than 66% since going public on June 26. People love its product. And GoPro has been profitable even before going public, unlike many other high-profile IPOs. The company generated $986 million in revenues and $61 million profits last year. Most importantly, there is little competition in the market it operates in.

GoPro’s sales soared 87% last year. The company is increasing its R&D expenditure to keep developing cool new products. During the latest quarter, GoPro spent 12% of its revenue on R&D. In contrast, Apple Inc. spends only about 3% of its total revenue on research activities.

GPRO's IPO priced at $24 per share, the high end of the expected price range, and posted a strong first day return of 30.6%. The stock spiked to close at $48.80 per share on July 1, and has since cooled slightly to fluctuate between $41 and $44 per share. GPRO closed at $36.84 per share yesterday.

About the Company

GPRO is manufacturer and marketer of cameras and accessories, best known for its wearable devices, which have spawned millions of Youtube videos of users involved in difficult-to-film activities-extreme sports are particularly popular video fodder.

GPRO's cameras are generally small and lightweight, in keeping with the firm's original purpose of creating cameras to be worn during sporting events. The cameras have now spread to common use in various fields.

GPRO sold 3.8 million HD cameras in 2013, adding to its tally of over 8.5 million HD devices sold since the firm launched its first HD camera in 2009. According to the NPD Group, GPRO's HERO cameras made up 45% of the American camcorder market in terms of dollars in 2013.

GPRO offers software applications to streamline the process of managing captured content and sharing it online; these apps have led to a massive viral advertising success. Users uploaded some 2.8 years of video with "GoPro" in the title to YouTube in 2013, and in the first quarter of 2014, videos with "GoPro" in the title, tags, description or filename were viewed over a billion times on YouTube.

Analysts Opinions

The 25 day quiet period on underwriter research that began with GoPro, Inc 's June 25 IPO will come to an end on July 20, allowing the firm's IPO underwriters to publish research reports on the wearable camera manufacturer and likely leading to at least a brief bump in the price of GPRO shares.

GPRO's IPO underwriters, including Barclays Capital Inc; J.P. Morgan Securities LLC; Citigroup Global Markets Inc; Allen & Company LLC; Piper Jaffray & Co.; MCS Capital Markets LLC; Robert W. Baird & Co. Incorporated; Raymond James and Associates, Inc; and Stifel Nicolaus & Company, Incorporated, will seek to maintain the stock's excellent start by releasing positive reports on the camera firm starting at the conclusion of the quiet period.

Summary

• The 25 day quiet period on GPRO will come to an end on July 20, allowing GPRO’s underwriters to release (likely positive) research reports on the firm on July 21st.

• This event could likely lead to a bump in the price of GPRO shares.

• While concern exists if GPRO can maintain its current share prices long term, many believe the hype on this company will not decline in the near-term.

• Given GPRO’s strong, influential underwriters, and excellent product, it is suggested that the quiet period expiration as another great time to buy into this company.

Conclusion

The hype train on this company is not anywhere near coming to a stop; as GPRO continues to benefit from exceptional name recognition, which has come about as a result of the company's shrewd targeting of the masses of consumers who want to share pictures and video of their activities online.

Though the firm faces heavyweight competition, it has a serious edge from its viral marketing campaigns, at least for now.

Given its solid list of underwriters, GPRO investors will likely see a boost around the time of the quiet period expiration on July 20th.

Therefore, based on the facts above the following options trade is recommended…..


**OPTIONS TRADE: Buy the GPRO Jan 2015 45.000 call (GPRO150117C00045000) at or under $2.80, good for the day. Place a protective stop limit at $1.10 and a pre-determined sell at $6.00.



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