Today: Shares in San Mateo's GoPro skyrocket in its public debut, and credit goes as much to its lifestyle cachet as its technology. Also, Twitter and Zynga gain on improved outlooks.
The lead: Will change be cool for GoPro?
Can you buy cool? Investors apparently think so, sending GoPro shares soaring more than 30 percent in its Wall Street debut Thursday.
After initially setting its IPO price at $24 a share Wednesday evening, raising at least $427 million, the San Mateo-based wearable camera company started selling at a 19 percent markup right out of the gate Thursday morning, at $28 a share, and quickly took off. Shares topped out at $33 before closing the day at $31.34, a 30.6 percent gain. The IPO was the biggest for a consumer electronics company in more than 20 years.
GoPro's durable, compact high-def cameras are popular with extreme sports participants, and its video channel was ranked No. 1 on YouTube's brand leaderboard in the first quarter of 2014. More than 50 million hours of GoPro footage was watched on YouTube in 2013.
While GoPro's profits rose 88 percent last year, its most valuable asset may be its cool factor. Much like Apple over the past decade, GoPro's popularity is based not just on its technology, but with the lifestyle that goes with it.
"They don't just sell a video camera, they sell the memory of the wave or the ski trip down the slope," Ben Arnold, an NPD Group consumer technology analyst, told Wired. "I think we are entering an age where lifestyle in technology is becoming very important."
It's not just GoPro. That lifestyle factor was key in Apple's $3 billion purchase of Beats last month. In addition to Beats' fashionable headphones and streaming-music service, "there's a little bit of the hipness factor," consumer tech analyst Danielle Levitas of the research firm IDC told the Merc's Troy Wolverton, that helped Apple's "penetration into Millennials and urban hipsters."
Just as Apple's signature white earbuds become a fashion icon a decade ago, and as FitBit bracelets have become synonymous with hard-core runners, GoPro's cameras identify users as people about to do something awesome, whether it's mountain biking down a slope, surfing a curl, or jumping out of a plane. "GoPro helps people capture and share their lives' most meaningful experiences with others -- to celebrate them together," the company declares on its web site.
Since its inception in 2004, GoPro has organically built a fun, cool, non-corporate reputation with minimal advertising (ask Google Glass how difficult that can be). That sort of cachet can be priceless; or worth more than $3 billion, in the case of GoPro.
The challenge now for GoPro is to take advantage of its cool factor to move beyond cameras, currently the source of virtually all its revenue. As Flip Video learned the hard way, a trendy gadget can fall out of favor in the blink of an eye. To hedge against flooding the market with its own products or becoming vulnerable to the next big trend, GoPro is looking to expand its brand into that of a content provider.
"We're a hardware company but we're turning more into a content company," Adam Dornbusch, GoPro's head of content distribution, said at Variety's Entertainment & Technology Summit in May. "The camera is just the tool to get to content."
GoPro already has popular channels on YouTube and Microsoft's Xbox Live, and signed a deal last year to provide a channel to Virgin America's in-flight entertainment. The company is seeking more licensing partnerships to cash in on the more than 100 athletes and 50 events it sponsors, in addition to its user-generated content, Variety reported.
GoPro's ability to transform itself will decide whether its big pop Thursday is justified.
"Is this a marketplace, a media company or a social-media company? The answer to that question provides the key to its future, and its valuation," Covestor CEO Asheesh Advani wrote in an analysis for MarketWatch.
Chris Chute, research director for IDC, agreed. "The long-term viability of the company depends on their ability to become a content platform," he told the Merc's Heather Somerville on Thursday. "Because in hardware, you either diversify or you get acquired."
SV150 market report: Twitter, Zynga gain on improved outlooks
A day after nearly across-the-board gains, the markets slunk back Thursday, with minor losses among the three major indexes. As tech stocks led Wednesday's surge, they were also the least affected in Thursday's retreat; the SV150 index even managed to close in positive territory.
Twitter surged more than 5 percent, or $1.98, to $41.44, Thursday after Evercore released a report predicting faster growth. Twitter shares have slumped this year on worries that the San Francisco microblogging site is not gaining enough new users. But Evercore said the World Cup could help spur significant growth. "Easing user growth comparisons, combined with strong engagement driven by the World Cup in June, lead us to expect domestic user growth re-acceleration," Evercore analyst Ken Sena wrote in a note, Bloomberg News reported. Despite Twitter's biggest gain in four weeks, its stock is still down 35 percent on the year.
Zynga shares rose 2.9 percent, or 9 cents, to $3.19 on increased optimism over mobile gains. Analysts at Trefis Team maintained their price target for the San Francisco-based social gaming company at $3.33, about 10 percent higher than its current market price. That's based on Zynga's successful efforts to grow its mobile user base this year. At its current pace, Zynga's mobile revenues should pass web bookings in 2014. "If this success continues and Zynga manages to launch interesting expansions and upgrades, it can grow its mobile bookings significantly this year," the report said.
Elsewhere in Silicon Valley, Google slipped a day after its I/O developers conference, dropping $1.16, or 0.20 percent, to $584.77. The Mountain View tech giant announced it had started purging some search results in Europe at the request of users, part of an order to comply with the so-called "right to be forgotten." Facebook fell 31 cents, or 0.46 percent, to $67.13, a day after being the latest tech company to release a workplace diversity report. The Menlo Park social network reported just 31 percent of its staff is female -- slightly better than Google but less than Yahoo and LinkedIn -- and 91 percent of its workers are either white or Asian. And with an eye on what could be the biggest IPO ever, Chinese Internet giant Alibaba said it would list its shares on the New York Stock Exchange under the ticker name "BABA." No date for its debut has been announced, but there is speculation Alibaba will go public on Aug. 8 -- 8 being an auspicious number in Chinese culure.
Silicon Valley tech stocks
Up: Apple, Google, Intel, Cisco, eBay, Gilead, VMware, Juniper, Netflix, Facebook, Zynga, LinkedIn, Netflix, Tesla, Twitter
Down: Oracle, HP, Yahoo
The SV150 index of Silicon Valley's biggest companies: Up 10.26, or 0.69 percent, to 1,496.27
The tech-heavy Nasdaq composite index: Up 29.40 , or 0.68 percent, to 4,379,76.
The blue chip Dow Jones industrial average: Up 49.38 or 0.29 percent, to 16,867.51.
And the widely watched Standard & Poor's 500 index: Up 9.55, or 0.49 percent, to 1,959.53.
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Follow Mike Murphy on Twitter at twitter.com/mmmmurf.