GoPro's shares shot up by 8.8% yesterday reaching a high of $5.30, simply because Chinese manufacturer Xiaomi expressed interest in acquiring the company. Before that, stocks saw a free-fall of 36%, bringing its market capital down to $761 million.
Given its extensive layoffs and the shutdown of its drone division, it's no secret that GoPro has had its share of considerable financial woes. In an interview with CNN in January, GoPro CEO Nick Woodman said that he was open to the idea of GoPro Inc. being purchased. He continued,
"It would be irresponsible not to. If there was an opportunity to merge GoPro with a larger parent company that could help us scale our business and provide a better return on investment to our investors than we can alone as an independent company -- absolutely ... we would welcome the opportunity to explore such an opportunity."
GoPro hired investment bank JPMorgan Chase & Co. to mediate such a potential sale. According to The Information, GoPro could be valued at $1 billion, based on how much Hewlett-Packard paid to acquire Palm, an electronics manufacturer that went through similar financing troubles many years ago. While Xiaomi is still eyeing GoPro for purchase, it also does not wish to overpay, said a person familiar with the matter.
Xiaomi already has its own line of action cameras, so it is very possible that it intends to augment its product line with GoPro's IP.