More bad news for GoPro

Daniel Howley
Technology Editor
Yahoo Finance
GoPro Karma flying
The GoPro Karma flying high.

After reporting poor Q3 2016 earnings results last week, GoPro (GPRO) just revealed that its new Karma drones are losing power while in flight.

In a well-timed release — Seriously, who’s really paying attention to this stuff on election night? — GoPro said it is recalling 2,500 Karma drones and that customers will receive full refunds.

GoPro is down 5.5% in after-hours trading to $10.86 a share.

A very small number of Karma owners have reported incidents of power failure during operation,” GoPro CEO Nick Woodman said. “We have moved quickly to recall all units of Karma and provide a full refund while we investigate the issue.”

Woodman added the company is working with the Consumer Product Safety Commission and the Federal Aviation Administration to ensure the Karma is properly recalled and taken out of the air. Importantly, GoPro said that no property damage or injuries have been reported as a result of any Karmas falling from the sky.

Karma and Hero5 camera
The Karma and the Hero5.

The Karma recall comes at an unfortunate time for GoPro. On Nov. 4, the company announced that its earnings fell by close to 40% in Q3 2016 and that it had to cut its full-year revenue expectations.

GoPro blamed its earnings problems on the fact that it had manufacturing issues with the Karma, as well as the company’s newest high-end Hero5 Black camera, which was, and still is, expected to be a big seller. Equally difficult for GoPro, at least as far as the Karma is concerned, is the fact that it has to contend with competition from companies like China’s DJI and its Mavic Pro.

In truth, the Karma probably won’t be the end for GoPro. If the recall were focused on the Hero5, the company would have a far greater problem on its hands. But that’s not the case. For the company to truly get back on track, it needs to ensure its products hit the market soon and that there are no further complications like this in its way.

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Email Daniel at dhowley@yahoo-inc.com; follow him on Twitter at @DanielHowley.