Almost exactly three months ago, on June 27, GoPro debuted on the NASDAQ stock exchange. The opening price on IPO day? $28.65. Current trading price? $87.60. That represents a 220% increase in the last 90 days. As of this writing, the company has a market cap of $11.04 billion. At that level, company founder Nick Woodman is worth $5 billion.
We've written pretty extensively about Nick and GoPro in the past. If you want a detailed back story, I suggest you read this article:
A Brief History/Recap
Nick Woodman's first tech venture was an online gaming site called Funbug that crashed and burned in the original dotcom bubble. His investors lost $3.9 million. In order to clear his head and recharge his batteries, after Funbug collapsed Nick embarked on a month-long surf trip to Australia and Indonesia. It was meant to be a last fling before he came home and got a normal job.
On that trip, Nick brought along a gadget he made out of a broken surfboard leash and rubber bands that allowed him to secure a waterproof disposable camera to his wrist so that he could take the perfect picture when the wave was just about to hit. After five months, Woodman returned to California with the germ of the idea that would turn into GoPro. He was 27-years old.
The first iteration of the GoPro was actually just a 35mm camera attached to the palm of Woodman's hand by a rubber band. Eventually, these early experiments resulted in a simple solution. Using 3-D design software, Woodman created a prototype for a plastic case that would cover a small camera.
He invested $30,000 of his own money as well as $35,000 from his mother and two separate $100,000 investments from his father. In its first full year of sales, GoPro grossed $350,000.
As we all know now, GoPro cameras are everywhere. In 2012, the company sold 2.3 million units and grossed $521 million. In 2013, the company earned $985 million.
At the end of the first day of public trading, Nick Woodman was worth $1.35 billion. Within a week, Nick was worth $2.25 billion. The stock has not cooled off for a minute in the last 90 days. Just last week it topped $80 for the first time. At that level, the company's market cap was $10 billion. Nick's 45% stake was worth $4.5 billion. And as we mentioned in the first paragraph of this article, as of this writing, the company is trading at $88.6 with a market cap of $11.14 billion. At that price, Nick's 45% stake is worth $5.013 billion.
And it's not just Nick who is feeling pretty great. Nick's sister Pilar (who cashed out $2.1 million on the IPO day) holds a stake that has gone from being worth $16 million to $50 million. Sister Andrea (who cashed out $2.6 million on IPO day) holds a stake that has gone from being worth $28 million to $86 million. Nick's mother has seen her stake rise from $8 million to $24 million.
Nick's father Dean is probably the happiest dad on the planet. Dean Woodman owns 7.25 million shares that are currently worth $645 million. Not a bad little return on a $200,000 investment!
Is This A Bubble?
The first major cautionary tale for GoPro is Flip. There was a time when the whole world was going nuts for Flip Cams. Flip was the first camera that allowed the average person to film HD quality videos from the palm of their hand. The company was so exciting and seemingly revolutionary, that Cisco bought it for $500 million.
What happened next? A little thing called the iPhone. All of a sudden, pretty much every cell phone on the planet had HD video capability. In an instant, Flip was rendered irrelevant. Why carry around a Flip, when you already have a phone sitting in your pocket?
Within a year of the acquisition, Cisco wrote off their entire $500 million purchase.
The second major cautionary tale for GoPro and Nick Woodman is Funbug. Look, I have no idea if this is a bubble or not. I'm not an expert in the stock market and you shouldn't take stock tips from me. BUT! I will say that hopefully Nick learned enough from his experience with Funbug to cash out a respectable rainy day fund, on the off chance that this does turn out to be another big bubble waiting to explode. As CEO, this can be hard to do without setting off investor fears or upsetting the Securities Exchange Commission. But there should be a way to conservatively sell off a set number of shares every day, regardless of good news or bad news. If it were me, I would try to put away at least $100 million in cold hard cash.
I really have no idea what will happen next with GoPro or the stock market. Do you think we're in a bubble? Do you think GoPro will keep marching higher?