In a securities filing on Monday, GoPro disclosed that it would sell up to $800 million of its stock in a secondary offering. The company itself could sell as many as $100 million in shares, while current owners could sell off an additional $700 million.
GoPro, known for its wearable and portable cameras, was the number one camcorder selling company in the United States in 2013, and it raised $491 million in its initial public offering last June. Though the purpose of the follow-on offering is to raise money for general corporate purposes, it should also lessen the impact of a potential selloff on its stock price next month when the IPO lock-up period ends. In an email to the company, founder and CEO Nick Woodman wrote, “‘this offering is intended to facilitate a more orderly and gradual sale of shares’ and ‘reduce the impact the IPO lock-up expiration may have on our stock price.’” Participating shareholders will have to sign a new 90-day lock-up agreement.
Woodman himself plans to sell a portion of his holdings; however, he expressed his continued commitment to the company and its vision. Woodman stated that the capital infusion would go toward “people, products, potential acquisitions, and infrastructure to help us achieve our long-term vision.”
While the new offering will stagger the impact of the 108 million shares scheduled to hit the market on December 22, it is not clear how GoPro’s stock will fare once the remaining shares are released in early 2015. The stock has benefited from limited supply, which has helped strengthen the company’s financial position. However, with a value of more than 64 times forward earnings, the stock will give insiders a strong temptation to cash in. Furthermore, many investors are betting against the stock, with a short-sale rate upwards of 30%.
Although GoPro shares fell as much as 5.1% after the announcement, shares have more than tripled from their IPO price, increasing from $24 to $79.06 per share as of Friday, November 7. And, in just its second quarter as a public company, GoPro posted a third-quarter profit on a 46 percent jump in sales.
GoPro to Offer an Additional $800 Million in Shares (PDF)