GoPro warned of default risk amid memory card price hike. Shares plummeted

Shares of action camera maker GoPro, whose capitalization on Nasdaq is only $188 million, collapsed by 12%. The company said that a sharp rise in memory card prices caused by the introduction of artificial intelligence has brought it to the brink of defaulting on its obligations.

GoPro's stock price collapsed 12% to $1.1 on the Nasdaq on June 1. At the premarket on June 2, the stock is down more than 5%.

The day before, the company said it had substantial doubt about its ability to continue as a going concern. It included this warning in addition to the annual report. GoPro published the statements itself back on March 12. But since then, significant events have occurred that could not have been foreseen, the manufacturer explained the need for the new disclosure.

In the last week of March, GoPro was unexpectedly told by its suppliers to raise memory card prices by 80-115%, and in April it was told of a planned cutback in production of the cards used in its cameras. This lowered GoPro's sales forecast for 2026, and also affected $24.5 million worth of other material purchases: its contracts with their suppliers do not provide for cancellation and refunds.

The boom in artificial intelligence has led to a sharp increase in demand for memory and higher prices, Bloomberg writes. The trend has affected manufacturers of cars, phones and other electronic devices, as suppliers shift production from consumer devices to highly profitable server chips for AI, the agency adds.

GoPro said it expects further operating losses, expenses exceeding revenues, which will further reduce liquidity and increase its reliance on external sources of capital.

In the first quarter of 2026, GoPro's revenue fell 26% year-over-year to $99 million, while its net loss jumped 72% to $81 million in the same period. Adjusted EBITDA was negative - minus $50 million versus minus $21 million for the same period in 2025.

Due to poor financial results, the company will not be able to meet the terms of its credit agreements. Specifically, the action camera maker writes, it has a $50 million second-priority credit facility with Farallon Capital Management, a revolving line of credit with Wells Fargo Bank as agent, and an agreement with Yorkville Advisors Global related to the issuance of up to $50 million in GoPro convertible notes.

The mere resubmission of the statements to include an explanation of doubts about the ability to continue operations already constitutes an event of default, the documents say. In addition, each of the agreements contains a provision that a default under one would trigger a default under the other. GoPro is actively negotiating with creditors to avoid this, the company wrote.

In May, the manufacturer announced that it had begun looking for strategic alternatives, which could include a sale of the company or a merger, and two days later that it had hired investment bank Houlihan Lokey, which is well-connected in the defense and consumer sectors, for that purpose.

Since the beginning of the year, GoPro's quotes have fallen by 22%. The company's securities have only one rating - "hold" - from Wall Street analysts. The target price of $1.3 provides a potential upside of 18%.