GoPro stock appears unstoppable

GoPro’s rally on Wall Street continues a week after the sport video-camcorder maker went public.

Shares opened at $45.05 and reached nearly $50 on Tuesday morning, more than double the company’s IPO price of $24. The surge Tuesday morning represents about a 106 percent increase over the stock price last Wednesday, when the company made about 17.8 million shares available to trade on the Nasdaq, and a 22 percent increase over Monday.

Despite warnings from investors and analysts that GoPro is now grossly overvalued, it would seem shareholders just can’t get enough. GoPro is one of the most recognized companies to IPO in months, and has a loyal following of consumers who use the durable little camera to record their extreme sports and outdoor adventure exploits. The San Mateo company has sold more than 8.5 million cameras since releasing its high-definition camcorder in 2009.

At the current share price, GoPro’s market value is close to $6.1 billion, double its valuation based on IPO prices.

But as Nigam Arora, an entrepreneur and founder of investment blog The Arora Report, warned that stock buyers are valuing GoPro not based on what the company is today — an efficient and popular consumer electronics business that is also losing revenue — but rather based on its promise to become a full-fledged media company, selling video content various TV and Internet channels. That hasn’t happened yet, and analysts say it will be an expensive and lengthy transition for GoPro. Only then, Arora said, would GoPro shares may be worth a $40-plus valuation.

Some analysts have said GoPro’s shares have popped because of the media blitz and influx of retail investors — or individual share buyers — but will fall back down to the $20 price range, and perhaps even lower.

Other tech companies have benefited from the GoPro fanfare, as stocks were up across the Nasdaq. Yahoo shares ticked up about $1 on Monday and again on Tuesday — although the mounting anticipation of Alibaba’s IPO later this summer or fall may be contributing to that momentum —   Twitter hit more than $42 per share, up from $39 last week, and Tesla climbed more than 4 percent to nearly $240.

Photo: Employees of San Mateo sports video-camera maker GoPro celebrate Thursday, June 26, 2014, as the company begins trading on the Nasdaq. Courtesy Christine Barna, Nasdaq 

Heather Somerville Heather Somerville (224 Posts)

Heather Somerville is a business reporter covering venture capital and startups for the Bay Area News Group.