Should You Bottom Fish In Twitter Inc (TWTR), GoPro Inc (GPRO), or Fitbit Inc (FIT)?
Investor sentiment on the Street continues to turn from bad to worse for Twitter Inc (NYSE:TWTR) and GoPro Inc (NASDAQ:GPRO) after both the stocks have fallen below their IPO prices. It is no longer business as usual for the two as short sellers continue to call the shots. Fitbit Inc (NYSE:FIT), unlike the two, is still trading above its IPO price but continues to draw comparison to the action camera maker.
GoPro’s Woes with Short Sellers
GoPro Inc (NASDAQ:GPRO) is trading below its IPO share price of $24 a share after a three-month bender. Short sellers have had their way and in the process played a big role in the company shedding more than 72% market value. The stock is now trading at lows of $21 a share, below its all-time highs of $93 a share.
GoPro Inc (NASDAQ:GPRO)’s biggest undoing has been its failure to broaden its market beyond extreme athletes. The misstep has all but given short sellers a reason to bet the stock is still overvalued. Short interest in the stock has quadrupled to highs of 33.2 million over the past year as bears maintain full control of the free fall. With short sellers in full control, any negative news is always sure to trigger a selloff.
Michael Pachter, an analyst at Wedbush Securities, believes the stock could fall even further as short sellers remain in the driver’s seat. GoPro Inc (NASDAQ:GPRO)’s newest camera Hero4 session has not enjoyed the best of receptions in the market. Price slashes have been the order of the day as the company tries to attract more sales. The fact that the company relies heavily on camera sales means it will always come under pressure on fears it is not shipping as many units as it ought to.
GoPro’s Innovation Credentials
Investors continue to question GoPro Inc (NASDAQ:GPRO)’s ability to innovate and grow its user base even as it continues to bet big on virtual reality hardware. A slowdown in sales is a big concern for investors and failure of the company to justify market for its cameras could push the stock even lower.
Skeptics are already declaring the company a fad, especially on the posting of yet another disappointing quarter. A disappointing outlook that equates to a 17% year over year sales decline for the current year continues to evoke further doubts of the company’s ability to revitalize its growth prospects in the near term.
Twitter’s User Growth Woes
Institutional investors continue to offload the stock aggressively as it becomes clear Facebook Inc. (NASDAQ:FB) won’t be toppled anytime soon as the dominant force in the industry. Twitter Inc (NYSE:TWTR) is currently trading below its IPO share price of $26 a share having shot to highs of $44.90 on the opening price. Investors will continue to push the stock lower in the market on user growth concerns.
What Twitter Needs To Do
Twitter Inc (NYSE:TWTR) boasts of a strong and unique content story with mass market applicability. Challenging user experience and falling engagement levels, however, continue to offset the positives. The only way the microblogging site can get itself out of the current mess is by improving user experience on the platform. In the process, it should be able to attract more users like other platforms and regain investors’ confidence.
If the management team does execute well and re-accelerate user growth, Twitter Inc (NYSE:TWTR) should be able to bounce above its IPO price. The stock’s future entirely depends on the number of users using the platform on a daily basis. Growth in the number of users should entice advertisers looking for big audiences to target with their marketing campaigns.
Twitter Inc (NYSE:TWTR) has the potential to skyrocket from the current levels should the management team come up with a strategy able to trigger user growth. The introduction of new features in the recent past, designed to increase engagement levels on the platform, could help curtail the bearish tone in the long run.
Fitbit Solid Run
Fitbit Inc (NYSE:FIT) is a completely different story compared to Twitter and GoPro. Unlike the two, Fitbit, a maker of wearable fitness-tracking devices, was already profitable when it went public on June 18. Its share price popped from $20 a share to highs of $30 a share. Over the past two quarters, as a public offering, it has delivered strong earnings unlike the other two that continue to disappoint.
Fitbit Inc (NYSE:FIT) continues to trade above its IPO price, but its precipitous decline in the recent past is a point of concern to the Street. A change of sentiments on the Street in recent days has to do with the surprise secondary offering in which the company reiterated plans to offload more shares
Pricing the secondary offering at $29 a share, roughly 8% below the closing price of the day, before it announced the sale did not go well with some investors. Even on the unprecedented pricing, executives, and venture capital investors participated in the offering affirming belief in Fitbit Inc (NYSE:FIT)’s long-term prospects.
While Twitter Inc (NYSE:TWTR) and GoPro Inc (NASDAQ:GPRO) need to innovate in order to stay relevant. Fitbit Inc (NYSE:FIT) needs to make sure that it continues to sell more of its devices and stay ahead of competitors.
Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.
Latest posts by Viraj Shah (see all)
- Tesla Motors Inc (NASDAQ:TSLA)’s Elon Musk Is Going After Semi Truck Industry - November 17, 2017 04:37 AM PST
- Tesla Motors Inc (NASDAQ:TSLA) Is Not “Hotbed for Racist Behavior” - November 15, 2017 06:58 AM PST
- Nikola Tesla and Tesla Motors Inc (TSLA) – The Past & Future of the World You Cannot Ignore- Part 1 - May 15, 2017 05:11 AM PST