GoPro soars again as merger announced with producer of AI infrastructure equipment

Shares of GoPro soared 40% on Tuesday. The company announced that it had agreed to merge with privately held optical-transceiver developer Starman Optical. The deal will give GoPro exposure to the AI data center trend and the defense market.

GoPro jumped more than 40% on the Nasdaq on Tuesday to $1.23 per share. The move came after the company announced it had entered into a definitive merger agreement with Starman Optical.

Under the terms of the deal, existing GoPro shareholders will receive $1.14 per share, or $285 million in total. That is almost 30% above Monday’s close, the day before the deal was announced, but 7.3% below Tuesday’s close. GoPro shareholders will also retain around 10% ownership of the combined company, according to the press release. On that basis, RedShark News said the merger looked more like a takeover.

The companies plan to close the deal by the end of the year. Their boards have already approved it, while the merger remains subject to approval by GoPro shareholders and regulators, according to the announcement. Once the deal closes, GoPro will remain listed on the Nasdaq.

In the last two trading sessions, the action-camera maker more than doubled its market capitalization. On Monday, its shares surged 46% after Bloomberg reported that Mark Fischbach, a YouTube star known as Markiplier, had acquired an 8.5% stake in GoPro, which made him the company's largest shareholder.

In premarket trading on Wednesday, GoPro is down 3% as of this writing.

The deal will allow GoPro to expand into the data center and defense markets, the company expects. Starman is part of billionaire Charlie Tebele’s Starman Holding and specializes in optical-photonics technology, including the development and manufacturing of optical transceivers. These devices convert electrical signals into optical signals and back again to transmit data over fiber-optic cables and are used in data centers, routers, and switches, among other applications. In 2024, Starman Holding formed a joint venture with Israel’s New Photonics to establish specialized facilities in the U.S. That joint venture, called Starman New Photonics, is now building a transceiver plant in New Jersey.

Following the merger, GoPro intends to become a leading U.S. imaging and optical solutions company in the national security field, GoPro CEO Nicholas Woodman said in the press release.

Since April, GoPro has been exploring opportunities to apply its technology in defense and aerospace. It hired consulting firm Oliver Wyman that month to assist with the effort. By May 11, the company had received several strategic approaches, after which it announced that it had begun evaluating strategic alternatives, which could include a sale or merger with another company.

In June, GoPro said there was substantial doubt about its ability to continue as a going concern because of a sharp increase in memory card prices and production cuts. All of this came against a backdrop of poor financial results. GoPro’s revenue fell 26% year over year to $99 million in the first quarter and declined 31% to $105 million in the second quarter. Meanwhile, the net loss for January-March jumped 72% year over year to $81 million, while the net loss for April-June widened almost 219% to $51 million.

Such performance means the company will be unable to comply with the terms of its credit agreements, GoPro stated. Its approximately $92 million in debt is expected to be repaid in full when the Starman deal closes, according to the press release.

Only one Wall Street analyst covers GoPro. They have a “sell” rating on the stock at a target price of $0.50 per share, implying 59% downside from the last close.