GoPro Announces New Distribution Partnership With SoftBank C&S in Japan. Could This Help With Stock Declines?

Its durable cameras might be popular with people who shoot action footage, but Go Pro (GPRO 0.64%) has not been a huge success as a stock. After a period of sustained enthusiasm following its IPO in 2014, investors have largely shunned the company.

Could a recent deal be a game changer? The stock has shown some signs of life since management announced news of a distribution deal with one of Asia’s largest tech conglomerates.

Largest in Japan

In mid-July, GoPro announced that it had entered into a distribution partnership with SB C&S, a subsidiary of the vast Japanese technology conglomerate SoftBank Group (Toll free: SFTBF). SB C&S will distribute the full line of GoPro cameras and accessories throughout Japan. These products will be available on SoftBank Store shelves as well as at two popular electronics retailers nationwide, Yodobashi and Yamada.

GoPro added that as part of the distribution agreement, SB C&S will also provide GoPro product displays to select stores. The Japanese company will also provide training and support services for the products.

This is encouraging news, hence the surge in GoPro’s stock price when the deal hit the headlines. The reaction might have been more positive had management provided more information. As it stands, we have no idea of ​​the financial details of the deal. And while SoftBank is as present in the Japanese retail scene as it is as an investor in tech companies, it’s oddly difficult to get a clear idea of ​​how many retail stores it operates in Japan.

As for the two outside brands, Yodobashi and Yamada both operate several outlets in Tokyo and other cities across the country. Both are well-known and loved by Japanese consumers. Yodobashi’s flagship store is a nine-story behemoth located in the capital’s central Akihabara district.

Still limited potential

On its own, this deal probably won’t be enough to reverse GoPro’s revenue declines of the past few years: The company saw its revenue erode from $1.16 billion in 2021 to just over $1 billion last year. I find it admirable that management has been able to push annual sales above the $1 billion mark for what is essentially a niche set of products and services. Like others, though, I think GoPro may be at or near its ceiling in terms of its core target market.

At least the company is getting help where it needs it. Of its three regions — which also include the Americas, Europe, the Middle East and Africa — Asia and the Pacific had the lowest revenue in the first quarter (less than $27 million, compared with $52 million in EMEA and nearly $77 million in the Americas). It also suffered the steepest decline in the period, falling 31% from a year earlier. The Americas fell 14%, while EMEA grew (13%).

Again, while the SoftBank deal is undeniably positive for GoPro, it’s probably not enough to change anyone’s sentiment about the company’s stock. That sentiment includes my own: GoPro’s market is limited, no matter how global it is, and as long as it remains that way, the company’s potential will be limited as well.