Bad Karma – GoPro Fires Hundreds of Workers and Exits the Drone Business

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by Yossy MendelovichJanuary 9^th, 2018

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GoPro released its preliminary fourth quarter 2017 report, which reveals that the company is in tough shape. It is firing hundreds of employees and will also exit the drone market.

Just when it seemed that GoPro was back on the horse again, the company has been facing a significant struggle in an ultra competitive market that lead to low sales, layoffs and the termination of the production of the Karma Drone.

The company shares were down more than 25% yesterday and have recovered slightly since. This is tough to see, especially for a company which was once a stock market darling. Now practically all their business is still reliant on the segment of action cameras, which is also heavily under pressure. 

Bad Karma

The Karma Drone proved to be an expensive and failed adventure from the day it was born. It caused the company a lot of pain, as technical issues and acute malfunctions even resulted in drones falling out of the sky. GoPro executed a mass recall, but then came the DJI Mavic Pro which completely defeated Karma in almost every aspect, and at a lower price point. 

Overview of their Q4/2017 report’s main key points:

• GoPro is reducing its global workforce from 1,254 employees as of September 30, 2017 to fewer than 1,000 employees worldwide.
• GoPro founder and CEO Nicholas Woodman will reduce his 2018 cash compensation to $1.
• Although the Karma Drone reached the #2 market position in its price band in 2017, the product faced margin challenges in an extremely competitive aerial market. Furthermore, a difficult regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead. GoPro claims that these factors make the aerial market untenable and they will exit the market after selling its remaining Karma inventory. They say that they will continue to provide service and support to Karma customers for the time being.

There is no doubt that GoPro is struggling hard to stay in the game. The challenge is not only that DJI seems to act as a main threat to the company, especially in the drone business – GoPro also faces tough competition in the action camera market it more or less created. 

GoPro needs to continue to innovate with new products, since the extreme-sport camera line is not enough any more. 

What is your opinion regarding the GoPro situation? What do you think it has to change in order to succeed? Let us know in the comments.