Alex
Canadian Dividend Investor, Founder of The Profit Zone/Profit Academy
GoPro's post-deal rally is a trap because buyers paid more than the fixed cash payout from Starman's acquisition will ever return. Starman, which makes optical parts for AI data centers, is buying GoPro for $285 million, about $1 a share in cash plus a small slice of the combined company, wiping out its heavy debt. GoPro lost $51 million last quarter as sales fell 31%, and warned in June it might not survive. Hype after a YouTuber disclosed an 8% stake pushed shares above the offer. x.comÂ
GoPro's 100% jump is not a turnaround; it reflects YouTuber Markiplier buying an 8.5% stake, making the stock one to avoid at around $1.36. x.comÂ
GoPro's underpriced buyout offers roughly guaranteed 30% upside if the private-equity buyer raises capital for a late-December closing. Market makers have pinned shares near $1 ahead of October 30 options expiry. Deal completion remains uncertain, but a repricing is expected after October 30, with big upside in early November. x.comÂ
GoPro's 82% jump on its merger with Starman Optical leaves 28% of the share price riding on a private transceiver maker with no published revenue. Holders get $1.14 in cash and keep about 10% of the combined company, so at $1.59 the market values that stub near $113m. GoPro's revenue fell 31% to $105m, and the release does not say where Starman's $377m comes from. The stock also jumped 46% on heavy volume the day before the announcement. x.comÂ
GoPro is slowly meeting its end, proof that a cool product does not make a great business without differentiation, bundling or a technology moat. It should have sold itself years ago; a buyer may still find some value in what is left. x.comÂ
GoPro looks set to become the next meme stock, not as big as GameStop, maybe slightly smaller than Beyond Meat. The trigger is @ShaneStoffer's report that Markiplier put 30% of his net worth into GoPro, despite its $400M of debt, $27M of assets and roughly $50M quarterly losses. x.comÂ
GoPro should eventually be a good short, though it may squeeze first. The stock was a failed YouTuber pump, then crushed by its M&A deal, under which holders get an equity stub in the AI business. That deal likely drew many short sellers, and with zero shares left to borrow at IBKR, it squeezed from $1.3 to $1.7, a setup similar to Beyond Meat or Bird. x.com x.com x.com x.comÂ
GoPro has regained Nasdaq compliance with the $1 minimum bid requirement and is off the noncompliant list, setting up a press release that could make this week's options pay off. x.com x.comÂ