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The Swift FCF Yield: GoPro

Q2 2016

GoPro FCF Yield Q2 2016

GoPro, Inc. (NASDAQ: GPRO) has done better with generating cash in past quarters. At the end of fiscal year 2015, I had reviewed their operating cash flow (OCF) which was $158m. Past years were also impressive and cash reserves were piling. Then Q1 and Q2 of 2016 passed showing a drastic turn in direction. The market reacted and took the price per share (PPS) down a steep slope to bargain values. My entry point was $10.40.

GoPro had been teasing consumers with new product launches: 360 video capture via Omni and a sUAV commonly coined a drone. As each week passed and no launch; the bears continued their thesis that GoPro was a fad. Now the Karma drone is upon us. The product launch is September 19, 2016 and anticipated to push the boundaries of innovation. This all comes in step with new FAA approvals for private, recreational drones as well as commercial use. The bullish idea is that GoPro will return to raking in the cash now that new tech products have left the pipeline and can commence revenue collection versus pure R&D expenditure.

Here is a swift look at GoPro's Free Cash Flow (FCF) Yield for Q2 2016:

FCF Yield Chart

That is to say, GoPro's FCF is at a loss requiring them to dip into cash reserves. At last count they had $280m in cash and short term investments. Look for Q3 and Q4 to break positive when The Swift FCF Yield will run a follow-up review.

Free Cash Flow can be tabulated by taking the value of the company's operating cash flow and subtracting from it the value of capital expenses. The yield is then formulated by dividing the result by either the market capital or enterprise value.


Disclosure: I am/we are long GPRO.

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