Last updated: June 26, 2014 8:10 pm

GoPro makes action-packed Nasdaq debut

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Shares in GoPro soared higher than the daredevil sports enthusiasts who use its action cameras as it made its stock market debut on Thursday, leaping more than 30 per cent to close at $31.34 on its first day of trading.  

The initial public offering is the biggest for a consumer electronics company in two decades. The successful opening demonstrates investors' sustained appetite for technology growth stories, despite high-flying consumer-internet debuts such as Twitter seeing their stock prices fall in recent months.

On Wednesday evening, the California-based company priced its IPO at $24 a share, the top of the indicated range of $21-$24 amid strong demand. The IPO was several times oversubscribed, according to people familiar with the deal.

Through the sale of 17.8m shares, split evenly between the company and selling stockholders, the deal raised $427.2m, excluding an overallotment option. That price equated to a valuation of nearly $3bn, up from $2.25bn when it received a $200m investment from electronics manufacturer Foxconn in late 2012. 

GoPro marked its IPO with a video posted to its YouTube channel, thanking its customers and employees after a montage of surfers, dirt bikes, bungee jumps, animal encounters and a marriage proposal. 

“There is a karmic magic that happens when you help the world express themselves in this way,” said Nick Woodman, GoPro’s billionaire founder and chief executive, in an interview on Thursday morning. “We see GoPro as a platform to enable the pursuit and celebration of human interest in human passion.”

Mr Woodman, who holds almost half of GoPro's stock, and its president Tony Bates, recently hired from Microsoft’s Skype unit, rang Nasdaq’s opening bell on Thursday. 

“The value proposition is very tangible to everybody, consumer and investor alike,” Mr Woodman said. “People have an inherent desire to have footage of themselves doing what they love to do . . . Then it comes down to execution and we are the team to do it. We are responsible with the business, we have strong insights into what consumers want and our track record is great.”

GoPro has almost 2m subscribers on YouTube, a key part of its plan to generate revenue from the content shot on its cameras. “When you consider the opportunity we have when we enable the world to capture its entertainment at scale, to aggregate the best of that content and redistribute it as GoPro programming . . . that becomes a very natural extension of our core business,” Mr Woodman said.

The company makes “substantially all” of its revenues from hardware, according to filings, but is trying to position itself as a new kind of media company, with millions of subscribers across YouTube, Instagram and Facebook, and content syndication deals with Microsoft’s Xbox consoles and the airline Virgin America.

It plans to invest to “scale GoPro as a media entity” by producing original content and aggregating video shot by its users, according to its prospectus.

Mr Woodman said GoPro planned to improve the tools it gives customers to edit and distribute their videos online, and then allow brands to pay to promote their products with their own material shot on its cameras. However, he did not say when GoPro might see meaningful revenues from this new line of business. “We’re not giving any expectations other than it’s very early days,” he said.

Some analysts have questioned whether it is appropriate to value GoPro like a media company when its sales are still so dependent on high-margin hardware, as it faces constant competition from larger rivals such as Sony and cheaper unbranded manufacturers. GoPro trades at a higher earnings multiple than Apple, which already has a well-developed content business through iTunes and its App Store.

After a strong start to the year, the IPO market in the US calmed this spring as the investors dumped high-growth shares in the secondary market. Investors have since been focused on companies with a strong market position, scale or profits. GoPro has been profitable for the past three years. In 2013, the company sold 3.8m cameras, almost doubling revenues to $986m.

JPMorgan, Citigroup and Barclays were lead underwriters for the offering.

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