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GoPro ( GPRO ) stock soared as much as 8.9% Tuesday, after the maker of wearable action cameras announced a multiyear global partnership with energy drink maker Red Bull. GoPro stock was up 5%, near 9.75, in late-afternoon trading on the stock market today . But the stock is still down 46% this year, and it has a lowest-possible IBD Relative Strength Rating of 1, meaning it’s in the bottom 1% of stocks for performance in the past 12 months. The partnership includes content production, distribution, cross-promotion and product innovation, the companies said in a press release . As part of the deal, privately held Red Bull will receive equity in GoPro, and GoPro will become Red Bull’s exclusive provider of point-of-view imaging technology for capturing video during Red Bull sporting events and media productions. “This partnership is very strategic for GoPro,” GoPro founder and CEO Nick Woodman said in a statement. “While we’ve worked closely for many years, as official partners we’ll be able to more effectively help one another execute our shared vision and scale our respective businesses.” GoPro went public at a price of 24 in June 2014 and reached as high as 98.47 in October 2014. But shares have fallen on declining sales and concerns about market saturation and lower-cost competition in the action camera market. Red Bull will receive less than 1% equity in GoPro, or about 1 million shares, Piper Jaffray analyst Erinn Murphy said in a research report. “While this extends the consumer impressions of the brand globally, we believe GoPro still is battling some challenges with reinvigorating unit sales of its capture devices,” Murphy said. “On the heels of the delayed drone launch, tepid consumer demand for action camera products over the last few quarters and a soft Q2 guide from Best Buy ( BBY ) this morning (14% of GoPro sales), we are maintaining our underweight rating” on GoPro. GoPro’s partnership with Red Bull will run for 3-1/2 years. As an exclusive partner, GoPro also will become Red Bull’s aerial camera partner, a role previously filled by drone competitor DJI, Murphy said. GoPro is scheduled to launch its Karma flying-camera drone in time for the holiday shopping season. Chinese consumer electronics manufacturer Xiaomi is expected to introduce its first drone on Wednesday. Xiaomi’s Mi Drone is expected to cost about $610, more than 20% below a comparable product from market leader DJI, Bloomberg reported Tuesday . The Mi Drone also will record ultra high-resolution 4K video. RELATED: Best Buy Latest Retailer To Disappoint, Gives Soft Profit Outlook Drone Market Positive For AeroVironment, Not GoPro, Piper Says . Scalper1 News
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