TL;DRGoPro issued a going-concern warning after memory prices rose 80-115%. Revenue fell 26%. It’s exploring a sale, a defence pivot, and 23% staff cuts.
GoPro warned on Monday that there is “substantial doubt about the company’s ability to continue as a going concern.” The action-camera maker reported a 26% revenue decline in Q1 and expects to breach several loan covenants. Shares fell as much as 14%.
The cause is memory. GoPro said its earnings forecast has been “significantly impacted” by an 80% to 115% increase in memory prices. In April, suppliers informed the company of a planned reduction in memory supply that would further reduce forecasted sales. The same DRAM reallocation that is killing the cheap smartphone is now threatening to kill GoPro.
The mechanism is the one we detailed last week. Samsung, SK Hynix, and Micron have redirected wafer capacity from consumer DRAM to high-bandwidth memory for AI data centres. HBM margins run at 70% or higher. Consumer DRAM margins sit between 20% and 30%. The memory makers chose the higher-margin customer. Everyone else pays more or gets less.
The 💜 of EU techThe latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!GoPro does not have the purchasing power to absorb the price increase. It is not Apple, which can negotiate quarterly contracts and pass costs onto consumers buying $1,000 phones. It is a sub-$1 billion revenue company whose products sell for $300 to $500 and depend on commodity memory to store high-resolution video. When memory costs double, the product becomes unprofitable.
