GoPro zooms into AI

Some of you may know Markiplier as the YouTuber who amassed nearly 40 million subscribers playing video games and making elaborate films.

But for the stock market nerds too busy staring at candlestick charts to keep up with internet celebrities, here’s why you should know him: Markiplier, whose real name is Mark Fischbach, recently disclosed an 8.5% stake in GoPro, making him the company’s largest individual shareholder.

Fischbach says he’s a genuine fan of GoPro’s products and thinks the camera maker is undervalued. And once a viral name like that showed up on the shareholder register, investors piled in: GoPro shares jumped 46% on Monday, then another 55% after hours as news of Markiplier’s stake spread.

Take it to the next level

Just a day later, GoPro announced a $285 million merger with Starman Optical, a private photonics company that makes high-speed optical transceivers used in AI data centers.

“We expect this merger to enable GoPro to grow across consumer, commercial and defense markets as a leading American imaging and optical solutions company, addressing important areas of national security related to cameras, optics and AI infrastructure,” CEO Nicholas Woodman said in a press release.

Starman will own roughly 90% of the combined company, while GoPro shareholders keep about 10%. GoPro also gets its roughly $92 million of debt repaid, while Starman gets GoPro’s brand, optical expertise, and portfolio of more than 2,500 US patents.

The stock closed another 40% higher on the day of the announcement, but lost 17.75% today as investors took profits after the massive run. Still, shares have soared 126.46% higher over the last five days.

A shaky picture

It’s quite the pivot to go from filming parkour to becoming an AI provider, but perhaps a necessary one. GoPro’s core camera business has been struggling for years as smartphones improved and Chinese rivals like DJI and Insta360 gained ground.

In Q2, GoPro’s revenue fell 31% to $105 million, camera sell-through dropped 38%, and the company’s net loss more than tripled from a year earlier to $51 million.

Adding insult to injury, the AI boom has actually been hurting GoPro’s old business. Soaring memory-chip prices have raised the cost of making its cameras, contributing to pressure on a company already carrying debt and fighting declining sales.

Everyone’s an AI company now

This isn’t the first struggling consumer brand to get an AI makeover. In April, Allbirds announced a pivot from sneakers to AI infrastructure, sending shares 582% higher in a day. It later renamed itself Smartbird, but the stock has since given back nearly all of those gains.

Whether GoPro suffers the same fate remains to be seen. To be fair, the company does have more connective tissue: It has decades of experience designing cameras and optical hardware, so pivoting into optical components for AI data centers isn’t quite as far-fetched.

Still, after watching a sneaker company become an AI company, investors may want to make sure the pivot comes with more than a new collection of buzzwords.—SY