Gas Money or a Camera Subscription for $49? This Company’s Turnaround Plan Could Lose Steam

Jul 03, 2022

Lately, my daily stroll to retrieve my morning paper from the end of my drive feels more ominous than it should.

The sun is out. Birds are singing. My neighbor is gleefully tending to her garden. But I know the latest headlines from the Wall Street Journal probably aren’t going to be upbeat.

Because at LikeFolio, I’m checking real-time consumer insights for key macro trends, and we’ve seen economic pressure mount.

Consider the trends below:

My key takeaway is that folks are buying things on credit to try and keep up with the rising prices of gas, groceries, and other essentials.

And more importantly, this is translating to a pullback in spending in some sectors.

At LikeFolio, we’re watching for these segments where consumers are reaching a tipping point.

WHERE are consumers getting frugal?

In May, we saw a significant decrease in consumer demand for electronics/discretionary devices, leading to a drop in Purchase Intent for GoPro Inc. (GPRO), iRobot Corp. (IRBT), Logitech International (LOGI), and even Best Buy Co. Inc. (BBY):

On the surface, GoPro appears to be faring the best versus its discretionary peers in this segment, but you can see a stark inflection point in May when you examine the company’s change in Earnings Score momentum over time:

This could be bad news for GoPro hopefuls.

After reporting traction in its move to become a more direct-to-consumer, subscription-centric business — subscribers rose to 1.74 million in Q1, up 85% YoY — consumers may start thinking more about trimming what they deem as non-essential subscriptions.

A yearly subscription for $49 may not seem like a lot at first, but the reason people are mentioning frugality more is because of the rising cost of everything around them.

If someone is paying $49 for a subscription that isn’t essential, it’s still less money available to pay for gas and groceries.

The uptick in mentions (blue line) started in November 2021, but you can see that mentions dropped starting around the end of April 2022 and heading into May 2022.

In addition, GPRO shares have struggled to gain steam, falling 48% this year.

Looking ahead, we’re not betting on a turnaround for this company any time soon.

We’ll continue to monitor core consumer trends (and segment performance) for actionable opportunities.

And maybe you’ll see these findings trickle into headlines once the news catches up.