GoPro engages Houlihan Lokey to evaluate sale amid defence pivot
The company hired the investment bank following unsolicited inquiries from across multiple sectors, marking a significant shift for the firm that pioneered the consumer action camera market.
GoPro has engaged investment bank Houlihan Lokey to evaluate a potential sale and other strategic alternatives, according to a statement released on Thursday. The decision follows the receipt of several unsolicited inbound strategic inquiries from parties across the defence, consumer, and financial sectors. The move signals a critical juncture for the action camera manufacturer, which has seen its financial position deteriorate amid rising losses and declining sales.
The strategic review comes shortly after GoPro announced plans to explore opportunities in the defence and aerospace markets. The pivot initially sparked investor interest, causing the company’s stock price to nearly double for a few days before falling back to previous levels. While the company’s hardware is renowned for its durability and image quality, the market’s initial enthusiasm has cooled, suggesting that the defence pivot alone may not be sufficient to sustain valuation growth.
Financial pressures have accelerated recent operational changes at the California-based firm. GoPro recently laid off a quarter of its workforce, reducing staff to approximately 600 employees. This represents a significant contraction from the company’s peak employment of 1,500 workers. The reductions coincide with a period where the company’s stock price had essentially flatlined at around $1 two years ago, highlighting the long-term challenges the firm has faced in maintaining its market position.
The interest in defence applications reflects a broader trend among technology and industrial companies seeking to capitalise on government spending. With investment in defence startups continuing to increase, exemplified by recent large-scale funding rounds for firms such as Anduril, GoPro’s pivot aligns with a market environment where entities with potential government contract capabilities are attracting significant capital. The company’s cameras, capable of withstanding extreme conditions, offer a logical, albeit unproven, entry point into this sector.
This is not the first time a sale has been considered by the company. Founder and CEO Nick Woodman previously indicated that a sale was briefly on the table in 2018. However, the current circumstances appear more urgent, driven by the need to address deteriorating financials and the strategic uncertainty surrounding the consumer action camera market. GoPro invented the category in the 2010s but has since faced intense competition from rivals including TomTom and Google’s Clips.
The engagement of Houlihan Lokey places the ball in the court of potential buyers and strategic partners. The board’s acknowledgment of unsolicited inquiries from diverse sectors suggests that the company is actively exploring options beyond its traditional consumer focus. The outcome of this evaluation process remains uncertain, with the long-term viability of the defence pivot yet to be demonstrated in the company’s financial results.
As GoPro navigates this transition, the broader market continues to watch closely. The firm’s attempt to leverage its technical capabilities for defence applications mirrors the strategies of other companies pivoting to data centres or energy storage to attract investment. Whether this shift will stabilise the company’s finances or lead to a full divestment remains to be seen.
