What Happened?
Shares of action camera company GoPro (NASDAQ: GPRO) fell 6.6% in the morning session after the recent speculative rally, fueled by its newfound status as a 'meme stock,' appeared to lose momentum. This decline followed a period of intense volatility for the action-camera maker. The stock had been labeled a 'meme stock'—a term for shares that gained popularity with retail investors, leading to price movements often disconnected from a company's financial performance. In the days prior, GoPro's stock had surged by as much as 98% in just four trading days, a rally that occurred without any positive company-specific news. Reports noted this frenzy had pushed the stock into 'overbought' territory, signaling a potential pullback was likely as the speculative momentum waned. This volatility stood in contrast to the company's underlying business challenges, including a history of declining revenues.
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What Is The Market Telling Us
GoPro’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 19.8% as the company became one of the latest companies caught up in a "meme stock" rally. The stock's dramatic climb occurred despite a lack of any specific news or press release from the company itself. The movement was attributed to a resurgence of interest from retail investors, who often coordinate on social media platforms to buy shares of heavily shorted companies. This tactic, known as a "short squeeze," can drive share prices up rapidly. GoPro's stock characteristics, including a low share price and a notable percentage of its shares being shorted, made it an attractive target for this type of trading activity. The surge was accompanied by extremely heavy trading volume, with tens of millions of shares changing hands, far exceeding its usual activity.
GoPro is up 25.9% since the beginning of the year, but at $1.39 per share, it is still trading 16.1% below its 52-week high of $1.65 from November 2024. Investors who bought $1,000 worth of GoPro’s shares 5 years ago would now be looking at an investment worth $269.98.
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