GoPro Inc (NASDAQ:GPRO) stock has almost quadrupled since its debut in July, with hitting an intraday high of $98.47 on Tuesday. Many GoPro shareholders have enjoyed the steep rise in the stock value, but many analysts who bet against the rise of GoPro stock feels annoyed by the consistent growth of its value. A ‘MoneyBeat’ article discussed about the GoPro stock and classified it as a Classic ‘pain trade’.
When a company stock trades in exact opposite direction to the expectation of many and inflicts pain to majority of the people, the stock can be termed as a ‘pain trade’, according to legendary trader, Jesse Livermore. Does GoPro Inc (NASDAQ:GPRO) qualify to be termed as a ‘pain trade’. In spite of increasing short interest on GoPro, the stock value keeps rising, which classifies this as a ‘pain trade’ for many who bet against GoPro.
Sales Trader at Robert W. Baird, Michael Antonelli feels puzzled at the rally of GoPro Inc (NASDAQ:GPRO) stock. “$GPRO is the textbook definiton of “pain trade”. how many people have been trying to short thing? been caught the wrong way?” Antonelli tweeted.
Antonelli also compared the rally of GoPro Inc (NASDAQ:GPRO) against other rallying shares like, Tesla Motors Inc (NASDAQ:TSLA), Twitter Inc (NYSE:TWTR) and Chipotle Mexican Grill, Inc. (NYSE:CMG). In his opinion all the above mentioned stocks rallied for the last few years against the logical thinking of many.
“The more GoPro keeps going up, the more people are calling a top, and then the more it keeps going up, […] It just keeps getting more ridiculous by the day. A company like GoPro that’s not fully understood by the market is going to inflict the most pain on non-believers,[…] Throw in the fact that it’s hard to borrow and it’s tough for people to express their view negatively at this point,” Antonelli was quoted as saying.
Antonelli mentioned that many investors are still bewildered on how to value a company like GoPro Inc (NASDAQ:GPRO). Whether to value it as just a camera maker or a media company too still remains as an unanswered question. Tough market condition might act as a fuel for the growth of GoPro Inc (NASDAQ:GPRO) too. As in the case of Twitter Inc (NYSE:TWTR) the pain trade could reverse very quickly.
“GoPro is almost a total psychological market play right now,[…] It won’t last forever. This kind of stuff can switch very quickly. But right now the most pain is being inflicted on people who don’t believe in the GoPro story,” Antonelli was quoted as saying.
Amid all the things happening in the market GoPro Inc (NASDAQ:GPRO) keeps rallying up, every good thing has to end and the rally of GoPro stock might not last far ever.