GoPro stock price is in a frenzy this year, as retail traders return. It surged by 36% on Monday, reaching a high of $1.70, its highest level since July, and 315% above its lowest level this year. This surge has brought its valuation to nearly $200 million.
Why GoPro stock jumped as US equities slumped
The latest surge in GoPro stock price was notable because it occurred on the same day that the S&P 500 and the Nasdaq 100 Index declined.
Its surge is also notable because the company’s business is facing substantial pressure as demand for its hardware and subscriptions wane.
GoPro’s revenue crashed by 18% in the second quarter to $153 million, continuing a trend that has been happening for years.
The revenue plunged as GoPro sold 500k camera units, down by 23% YoY. Most notably, its important subscription business was flat at $26 million as the number of subscribers fell by 3% to 2.45 million.
The only notable development in the financial report was its profitability. Its net loss was $12 million, an improvement from the $36 million it made in the same period last year. This growth happened because of its progress, including its job cuts.
GoPro’s turnaround will be hard to implement because it is largely a one-product company. While its action cameras are market leaders, many buyers don’t upgrade them unless they break.
Therefore, the GPRO stock price surged because it has become a meme company, as AMC and GameStop were a few years ago. A meme stock is a company whose shares perform not because of its fundamentals, but the sentiment of the trading community.
GoPro meets this criteria because, like GameStop, it is a fallen angel or a company that was once popular and one that has lost its shine.
It is also a highly shorted company with a short interest of 10%. Historically, these highly shorted companies are always exposed to short squeezes as we saw with GME and AMC.
Therefore, the stock may continue rising in the near term as investors start pondering about the upcoming interest rate cuts by the Federal Reserve. In most cases, meme stock thrive during periods of monetary policy easing.
GoPro stock price technical analysis
GPRO stock chart | Source: TradingView
Technicals have also contributed to the ongoing GPRO stock price surge. As the chart above shows, it was forming the highly bullish falling wedge chart pattern on the daily chart. The rebound happened as the two lines neared their confluence level.
GoPro share price has surged above the important resistance level at $1, and formed a golden cross pattern as the 50-day and 200-day moving averages have crossed each other.
The stock also seems to be forming a double-top pattern whose neckline is at $1.17, and the upper one is at $2.36.
Therefore, while the company has weak fundamentals, the ongoing meme stock frenzy may continue, pushing it to the double-top point at $2.36, which is about 42% above the current level.
Read more: Here’s why the GoPro stock price is surging and what comes next
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