GoPro's (GPRO) China Market Will Be Limited Due to Competition from Xiaomi, Says Oppenheimer

Oppenheimer maintained an Underperform rating on GoPro (NASDAQ: GPRO) with a price target of $35. The stock declined Monday after Xiaomi unveiled its Yi Action Camera, which sells for only $64 in China. In the view of analyst Andrew Uerkwitz, Xiaomi's product has a superior value proposition, and GoPro's market could confined to extreme sports enthusiasts in China. He also said it is not a threat to GoPro's core market in the US and Europe.

"We reiterate our view that aggressive competitors such as Xiaomi will materially reduce GoPro's market opportunity in China and Asia," said Uerkwitz. "Both Yi Camera and GoPro Hero 3+ offer Ambarella A7 SoC (camera's CPU), FHD at 60 fps, 40-meter waterproof, and WiFi/BT connection to smartphones. Both cameras use image sensors from Sony— Yi Camera uses a 16MP vs. GoPro's 10MP. Yi Camera is selling at about 1/5 of Hero 3+ Silver's price ($64 vs. $299.99."

"Also in typical Xiaomi style, we believe the camera will be in very short supply in the near term; therefore, it does not pose a threat to GoPro's US and EU markets in our view. However, we believe this product announcement has set a key price reference point (RMB399) for Chinese consumers, who may at least give a second thought to their action camera purchase," continued the analyst.

Uerkwitz added, "We believe Yi Action Camera and its likes, will prevent GoPro from getting material market share in general consumer market in China. Going forward, we believe GPRO's market will be confined to extreme sports enthusiasts in China."

For an analyst ratings summary and ratings history on GoPro click here. For more ratings news on GoPro click here.

Shares of GoPro closed at $41.98 yesterday.

You May Also Be Interested In

• Super Micro Computer (SMCI) Falls 6%
• Morgan Stanley issues a double upgrade on eBay while downgrading Etsy
• Piper Sandler Downgrades Southwestern Energy (SWN) to Neutral