GoPro warned that it may not survive. AI memory is killing companies that make things human.
The TL;DR
GoPro issued a persistent warning after memory values increased by 80-115%. Revenue fell by 26%. Assesses sales, security pivot, and 23% staff reduction.
GoPro warned on Monday that there are “serious doubts about the company’s ability to continue as a going concern.“The action camera maker reported a 26% drop in revenue in Q1 and expects to breach several loan agreements. Shares fell as much as 14%.
The cause is memory. GoPro said its revenue forecast was “very affected” with an 80% to 115% increase in memory prices. In April, suppliers notified the company of planned reductions in memory supply that could reduce forecasted sales. The same DRAM redistribution that killed cheap smartphones now threatens to kill GoPro.
The machine is the one we described last week. Samsung, SK Hynix, and Micron have redirected wafer capacity from consumer DRAM to high-bandwidth memory for AI data centers. HBM margins run at 70% or more. Consumer DRAM margins remain between 20% and 30%. Memory makers have chosen the high margin customer. Everyone pays more or gets less.
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GoPro does not have the purchasing power to absorb the price increase. Not Apple, which can negotiate quarterly contracts and pass the cost on to consumers who buy $1,000 phones. It’s a sub-$1 billion revenue company whose products sell for $300 to $500 and rely on hardware memory to store high-resolution video. If memory costs twice as much, the product is worthless.
The company received a foreclosure from its lender after failing to comply with the loan covenants. It does not expect to have sufficient funds to meet the obligations if the payment offer is initiated and the outstanding debt should be called for. It has a second $50 million facility from Farallon Capital Management and a revolving credit facility with Wells Fargo as agent.
GoPro is partnering with advisors to explore alternatives including a potential sale or merger. It is also looking at opportunities in defense and aerospace for “new markets and product categories.” The company has already announced plans to cut 23% of its workforce worldwide in April.
The defense pivot is like the robotic pivot of Faraday Future: a consumer electronics company under financial pressure reaching a high-profile, government-sponsored market where competitive forces are different. Whether GoPro’s robust camera technology translates into security contracts is not proven.
The only near-term help comes from China. ChangXin Memory Technologies’ DRAM was spotted inside Corsair’s retail DDR5 kit. But CXMT also plans to convert 20% of its volume to HBM because the margins are unstoppable. Consumer memory deficits are structural, not cyclical.
The memory problem appears in all consumer electronics. The Asus ROG NUC 16 costs $1,200 more than last year’s model, in part because of the DDR5 pricing. Dell increased laptop prices by 15-20% in December. Apple agreed to pay Samsung a 100% premium for LPDDR5X for the iPhone. These companies can deduct the costs. GoPro can’t.
GoPro was founded in 2002 by Nicholas Woodman. It went public in 2014 at a valuation of $3 billion. The company popularized the action camera category and created a brand synonymous with extreme sports and entertainment content. Its share price peaked above $90 in 2014. It trades below $1 today.
The forward warning makes GoPro the most visible victim of AI memory. It won’t be the last. Any consumer electronics company with thin margins, limited purchasing power, and reliance on DRAM assets faces a similar equation. The AI boom has created huge fortunes for three memory makers and the hyperscalers they offer. GoPro is the other side of that equation.
