GoPro slips as Snapchat steps into wearable cameras with 'Spectacles'
Shares of GoPro (GPRO) are underperforming the broader market after privately-held social media juggernaut Snapchat announced "Spectacles," a pair of sunglasses with an integrated, auto-uploading camera. SNAPCHAT STEPS INTO WEARABLE CAMERAS: Snapchat, the social app beloved by millennials that has reportedly passed Twitter (TWTR) in daily active users, announced its first hardware product over the weekend: a pair of sunglasses with an integrated video camera called "Spectacles." The $130 device connects directly to the Snapchat app via Bluetooth or Wi-Fi, is capable of taking a day's worth of "Snaps" on a single charge, and will be available in the fall. In a related announcement, the company renamed itself Snap Inc, with co-founder and CEO Evan Spiegel commenting, "Now that we are developing other products, like Spectacles, we need a name that goes beyond just one product." The news follows GoPro's September 19 unveiling of its latest cameras, a consumer drone, and a cloud upload service as the company looks to ease investor fears and stoke growth by diversifying its product base. The action camera maker said its latest offerings "dramatically simplify the process of capturing, editing and sharing engaging content," though it may be hard pressed to match the one-touch functionality of Snapchat's early move into wearable cameras. ANALYST QUESTIONS NEW GOPRO PRODUCTS: Snapchat's latest news isn't the only perceived negative for GoPro, with BlueFin analyst John Donovan questioning in a weekend research note whether its new HERO5 camera and Karma drone are good enough to meet 2016 revenue goals. As Donovan digs into reviews and impressions of the products, his takeaway is "mixed at best" -- the camera addresses many of the brand's previous shortcomings and is significantly easier to use, but the $399 device could pressure margins and, truthfully, is only "minimally better" than the HERO4. GoPro's integrated, compact design still doesn't allow for optical zoom or interchangeable lenses, and reviews are actually placing the camera below the Apple (AAPL) iPhone 7 Plus, Donovan says. Bottom line, the focus on ease of use and cheaper components seems like an attempt to solve a nonexistent problem while giving up GoPro's leading-edge performance, the analyst contends, leading him to question whether this is the right long-term strategy. The Karma drone, meanwhile, is "intriguing" to Donovan, though he argues the lack of cutting-edge features like a built-in camera, obstacle avoidance, precision hovering or target detection "seem to make the Karma aimed at the beginner segment," potentially limiting its market acceptance. PRICE ACTION: Shares of GoPro are down 3% to $16.63 in afternoon trading, pulling back some of the gains seen after its September 19 product reveal.