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Sales are high for GoPro, but confidence in the firm drops after Karma recall

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GoPro's financial struggles recently resulted in cutting the entertainment division -- but despite positive sales for the Hero5, the company isn't out of the woods yet.

The GoPro Hero 5 is the best-selling digital camera in several regions including the U.S., but despite the relaunch of the Karma on February 1, the recall is making what would otherwise be a bright spot in the company’s history look rather bleak. Despite the success of the Hero 5, the firm’s stock price dropped by $.82 per share in the last quarter of 2016, indicating that while sales may be improving, confidence in the company has been affected by the recall.

According to the latest financial reports, the Hero5 was the best-selling digital imaging device both in the number of cameras and total spent in the U.S., Europe, the Middle East and Africa. Features like voice control and stabilization brought a much-needed update to the GoPro line two years after the Hero4. The company says the GoPro Hero Session is estimated to be the second-best-selling camera in the U.S. The action camera’s success resulted in the second highest quarterly earnings in the company’s history, although the firm posted a loss for the year.

Launched at the same time, the Karma was expected to be a bright spot in an otherwise difficult year for the company, but just a few weeks after the drone launched, the company voluntarily recalled it when some units lost power mid-flight. The issue was a simple fix to the battery latch to keep the battery in place, but identifying the issue has not prevented the firm’s stock price from falling.

The recall likely could not have happened at a worse time, as the company was already struggling, with several manufacturers introducing competitive products with similar features as the older Hero4. Shortly after the recall, GoPro announced a restructuring plan with 200 layoffs.

January saw a stock price rise for the company, up by 23 percent in the first month of the year. But, a day after relaunching the recalled Karma, those numbers dropped by ten percent in after-hours trading.

Along with the highlights of the Hero5 sales, the company also noted that the number of Quick Mobile app users tripled, while the company’s social media followers also grew, with Instagram up by 53 percent and views on YouTube up by 86 percent.

According to founder and CEO Nicholas Woodman, the company will continue to adjust costs to return to profitability. “In 2016, big investments in hardware, cloud, and mobile yielded a solid foundational experience for our customers,” he said. “In 2017, we will build on this foundation for our customers while improving efficiency and managing cost to achieve profitability.”