That didn’t last long: Camera maker GoPro announced Monday that it is exiting the drone business, killing off its Karma drone product after selling off all remaining inventory, and laying off 250 employees in the process. The company also told investors that its traditional cameras didn’t sell as expected during the holiday quarter, forcing it to cut prices.
GoPro first introduced its Karma drone in 2016, but the project was plagued with problems from the onset. Early Karma drones were riddled with errors, with consumers reporting that the devices were losing control, and literally falling out of the sky. GoPro had to recall the product, and missed the crucial 2016 holiday quarter.
The company began shipping Karma drones again in early 2017, but was facing stiff competition from Chinese drone market leader DJI as well as several cheaper upstarts. And things didn’t exactly get easier when the Federal Aviation Administration decided that drone owners have to register their devices with the agency.
“Although Karma reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market,” the company wrote in a press release Monday. “Furthermore, a hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead.”
GoPro promised continued support for existing Karma drones.
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The company also said Monday that its HERO5 Black camera didn’t sell as expected in the early days of the holiday season, forcing it to cut prices in December, and subsequently release a lower guidance for the quarter. GoPro also said Monday that it reduced the price of its high-end Hero6 camera in January.
Soft demand followed by price cuts and mounting losses: That’s nothing new to GoPro investors, who saw the same thing play out when the company first introduced its Hero Session camera. That ultimately led to significant layoffs and the decision to put an end to ambitions entertainment industry plans.
On Monday, investors didn’t seem too pleased by the déjà vu, sending GoPro’s stock down 32 percent immediately following the company’s news release.