GoPro Inc (NASDAQ:GPRO) spending heavily on R&D for unknown reasons
GoPro Inc (NASDAQ:GPRO) has recently released its revenue figures for the current quarter. In light of these figurative revelations, the investors of the best action camera manufacturers are looking worried. Where revenues showed an upsurge in the past, dramatic decline has been observed. This might be due to a substantial 14.2% investment in the GoPro Inc (NASDAQ:GPRO) research and development sector.
Prior to 2014, the recorded revenues were quite positive. However, the current year has not been very productive. This change in the profit figures is quite dramatic. GoPro Inc (NASDAQ:GPRO) caters to a restricted market that went public only recently. There recent extravagant spending in their R and D may not seem wise in the current scenario. A more sensible decision is to strengthen their management and revenue structure.
It also indicates that GoPro Inc (NASDAQ:GPRO) is insecure or concerned about its technological edge over its competitors. GoPro Inc (NASDAQ:GPRO)’s decision to upgrade the R&D budget also signifies that it is quite confident regarding its sales and marketing department. This strategy may not be a good decision in light of recent losses as per the reports.
An observation of R&D spending by various companies reveal that GoPro Inc (NASDAQ:GPRO) is spending almost thrice of Apple Inc (NASDAQ:AAPL) spending in the same sector. This comparison may not be fair, seeing that both companies have different business focuses. However; Apple Inc (NASDAQ:AAPL) is not a small company either. It’s known all over the world for its excellent technology. Perhaps, this dramatic focus on R&D is to make sure that GoPro Inc (NASDAQ:GPRO) cameras are never transcended by some other company’s products. Another reason could be to enhance the GoPro Inc (NASDAQ:GPRO) consumer population.
Although GoPro Inc (NASDAQ:GPRO) has a significant amount of capital invested in its software; the applications are not deemed up to the mark. Samsung Electronics (KRX: 005930) spends half the amount of what GoPro Inc (NASDAQ:GPRO) is spending on its R&D department. Samsung Electronics (KRX: 005930) deals with wide range of sophisticated devices like televisions, smartphones, music systems and has several remarkable apps to its name.
GoPro Inc (NASDAQ:GPRO) hasn’t had any impressive features to boost, it still has a hefty $35 million spent on Resource and Development in their last quarter. Hence, investors’ query of why this capital is not spent on enhancing sales or the management is quite fair.
Being a self proclaimed champion in wearable technology, GoPro Inc (NASDAQ:GPRO) will face competition from other companies that have started to invest in this sector. The company’s recent budget for R&D is quite a serious issue for its long term investors. Some confidence can be drawn from the momentum seen in their financial figures. The third and fourth quarter figures, when released will project the actual state of the company’s spending priorities.
2015 is being projected as the year of stocks and several companies’ efforts of stepping into innovative and challenging business ventures. Hence, it is integral to have accurate spending priorities to ensure best practice.