GoPro Inc (NASDAQ:GPRO) is attached to issues like valuation and competition, Kathleen Smith said in a recent discussion on CNBC.
The comment comes from the Renaissance Capital co-founder as she discussed why GoPro Inc (NASDAQ:GPRO) is currently not in her portfolio. According to Smith, the company is not in her portfolio at the moment because it is not large enough to enter their main portfolio, the ETF portfolio of her firm.
Nonetheless, she said that Renaissance Capital will most likely consider GoPro Inc (NASDAQ:GPRO) in its next rebalance. She noted that her firm has a passive portfolio, a basket of 60 newly-public companies which they pick from to invest in as the firm makes portfolio plays.
However, she did note that GoPro Inc (NASDAQ:GPRO) has issues that her firm will have to look into. She explained:
“I certainly think that you can’t help but be impressed with what the company has done and the progress that it has made to date. However, the issue is valuation and that knowing that competition is going to happen. How could Sony or Garmin or any of the big camera manufacturers [or Apple]not be gunning at this company? …I think the issue is how well the company has done, can they maintain these barriers to entry and how big is this market. Our feeling is that, at this valuation, and we’ve been looking at maybe a $1 a share next year’s earnings, but that gets the company at a level that is 40 times next year’s earnings, that is probably a little bit more than what we had modeled as to what might be the fair value.”
However, the argument was also made in the discussion that GoPro Inc (NASDAQ:GPRO) will continue to do well as a company. Watch the video below for this opposing argument.