Aug. 18 at 7:16 PM
$GPRO
GoPro looks strategically attractive to Garmin because Garmin could keep most R&D/product development while eliminating much of GoPro’s duplicated sales, marketing, G&A, finance, HR and corporate overhead. That could potentially cut annual opex by
$100M+.
GoPro’s ~
$116M subscription/services run rate, hardware gross profit, brand, IP and engineering could then make the acquired operation profitable, with additional upside from selling GoPro services to Garmin customers.
We estimated Garmin could rationally justify roughly
$300M–
$700M EV, with
$400M–
$500M the most attractive zone and ~
$600M+ increasingly difficult to justify versus waiting for bankruptcy.
After roughly
$60M net debt and dilution:
*
$300M EV → ~
$1.20–
$1.32/share
*
$400M → ~
$1.70–
$1.87
*
$500M → ~
$2.20–
$2.42
*
$600M → ~
$2.70–
$2.97
*
$700M → ~
$3.20–
$3.52
At
$1.32, I think GoPro’s board would probably accept rather than risk Chapter 11.
