Following lower-than-expected revenue in Q4, GoPro is reportedly planning to lay off 7% of its workforce.
While we don't often share financial results for these companies, there is an interesting aspect of this whole topic that's worth discussing. First off, GoPro's stock has taken quite a tumble since an August 2015 high of over $60, closing today at just $14.61, nowhere near its all-time high of over $80 (or it's IPO of $24). Analysts and GoPro were both expecting revenue well over $500 million, but it's looking like Q4 revenue will be somewhere around $435 million, with full reports coming next month. That's quite a bit off the mark, and part of the reason the stock has dipped — though most tech-related stocks have taken a tumble recently.
The most interesting (and obviously unfortunate) part of this situation is the reason why GoPro is cutting about 7% of its 1,500 person-strong workforce. Re/code obtained an email sent to GoPro employees (h/t to The Next Web) explaining that a pricing mistake caused weak sales in the GoPro HERO4 Session (we've written about the previous price drops of the HERO4 Session here, and here)
Today’s announcement reflects the issues we faced in 2015, largely related to our launch and pricing of HERO4 Session. While we clearly made a mistake pricing Session at $399 (more specifically I made the mistake, it was my decision), I’m proud of how we responded. We recognized the problem, price adjusted to $299 … recognized that wasn’t enough and price adjusted again to $199 which positioned Session as the best entry-level product we’ve ever made.
There's obviously more to the layoffs than just this pricing mistake, but it's unbelievable how many people are now being affected by the cost of just one product in a wide-ranging lineup. The HERO4 Session seemed on the higher side when it was first announced, as it had lower specs and less features than similarly-priced GoPro cameras at the time. It also doesn't help that due to its small size, there is no removable battery, which makes it nearly useless for a lot of productions, unless you're connecting it to an external battery source on set (and if you do that, you're losing much of the size advantage in the first place).
Whenever new products are announced, people tend to focus on price right off the bat, and in this case, it seems that the general public felt the same way. It's worth considering that pricing decisions are not easy, and not necessarily about squeezing every dollar out of the consumer. Just because a product could theoretically be sold for less, doesn't mean that's the best way forward, and on the other hand, if a product is truly overpriced, people won't buy it.
Smaller public companies like GoPro are greatly affected by missing revenue expectations, and it's part of the reason that even larger film-related businesses choose to stay private. After some adjustments, hopefully GoPro can get back on track, and continue trying to innovate with their highest-end products.