Comparing the Gross and Operating Margins of GoPro (GPRO)

Shares of Small-cap Farm & Heavy Construction Machinery company GoPro were up 16.2% during today's morning session, as the S&P 500 posted a -0.0% change. Today's upwards movement shows that investor interest in GPRO stock is strong -- but how closely have they studied the company's margins?

While GoPro's gross margins for the last year are positive, we are concerned that the company's operating margins are in the red. Gross margins take into account only the cost of revenue, or variable costs -- meaning the cost directly associated with producing the products or providing the service offered by the company.

Operating margins, on the other hand, take into account the company's overhead as well. Overhead, also called fixed costs, includes the company's rent, salaries for personnel not included in cost of revenue, equipment and supplies, amortization, and depreciation. Operating margins tell you about how efficiently GoPro is run, and gross margins tell you how profitable its product line is.

Date Reported Revenue ($ k) Cost of Revenue ($ k) Gross Margins (%) YoY Growth (%)
2023 1,041,891 693,269 33 -10.81
2022 1,093,541 686,713 37 -9.76
2021 1,161,084 683,979 41 17.14
2020 891,925 577,411 35 0.0
2019 1,194,651 781,862 35 12.9
2018 1,148,337 786,903 31

GoPro's gross margins have a coefficient of variability of 36.2%, with a low percentage rate being more desirable as it indicates stability. Revenues have a delta of -1.6% while cost of revenue is shrinking at a rate of -2.1%, which allows for the company's gross margins to grow at an average 1.3% per year.

Date Reported Total Revenue ($ k) Operating Expenses ($ k) Operating Margins (%) YoY Growth (%)
2023 1,041,891 384,792 -3 -175.0
2022 1,093,541 367,873 4 -60.0
2021 1,161,084 363,889 10 350.0
2020 891,925 351,333 -4 -inf
2019 1,194,651 415,122 0 100.0
2018 1,148,337 455,396 -8

The table above tells us that, on average, GoPro has not been profitable over the last four years, which should be a warning sign to prospective investors. One bright spot, however, is that the company's operating margins are growing at an average yearly rate of 14.3%.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.