GoPro Issues a Recall of Every Karma Drone
The recall is a PR nightmare. The question is: How badly will it hurt the company?
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On Tuesday evening, just as the first polls were beginning to close in the 2016 election, GoPro quietly announced that it was recalling all 2,500 Karma drones it had sold up to that point, just 16 days after its release. Apparently a small number of the drones had a rather unfortunate problem of spontaneously losing power midflight and falling out of the sky. So far, no injuries or property damage have been reported.
GoPro has asked consumers to stop flying and immediately return any Karmas they’ve purchased, either directly to GoPro or to the store where they bought it, for a full refund. It is not clear if GoPro knows yet what is causing the problem, but for the time being, all sales are halted and the company will not be issuing replacements. At the time of this writing, a thread on GoPro’s community forum called “WARNING: GoPro Karma Falls Out of the Sky” is ten pages deep and has several examples of video shot from the drones as they lost power and dropped.
“Safety is our top priority,” said Nicholas Woodman, founder and CEO of GoPro, in the company’s official release. “A very small number of Karma owners have reported incidents of power failure during operation. We have moved quickly to recall all units of Karma and provide a full refund while we investigate the issue. We are working in close coordination with both the U.S. Consumer Product Safety Commission and Federal Aviation Administration. We are very sorry to have inconvenienced our customers and we are taking every step to make the return and refund process as easy as possible.”
The timing couldn’t be much worse for GoPro. The California company’s stock price has been struggling much of the year. Then, just last week, it announced that its Q3 sales projections had missed the mark by a whopping 23 percent, or $75 million. GoPro had originally hoped to release the Karma drone in the spring of this year but opted to wait until late fall to unveil both the Karma and GoPro’s new flagship action cameras, the Hero5 Black and the Hero5 Session. Essentially, the company was banking on gangbuster holiday sales, with a stated target of $625 million for Q4. Unfortunately, with regard to the new cameras, GoPro called its production schedule “compromised” and admitted that it anticipated meeting demand. Combine that with the now-recalled Karma and things look, in a word, bad.
With the announcement of the recall, GoPro’s already struggling stock dropped another 8 percent in after-hours trading, hitting an all-time low of $9.80 per share, though it has since rebounded slightly to $10.40. For context, in October 2014, GoPro’s stock peaked at nearly $87 per share.
If there’s any silver lining here for GoPro, it’s that DJI (the 800-pound gorilla of consumer drones) has been struggling with production for its latest drone, the Mavic Pro. Announced just a week after the Karma, the Mavic Pro is an even smaller 4K-shooting foldable drone. I’ve tested both, and while I think the Karma’s image quality and ease of use are a lot better (and you can detach the stabilized gimbal for smooth handheld shots), the Mavic Pro is much smaller and lighter, more feature rich, and can fly longer and farther. As such, demand for the Mavic Pro has been extremely high, so the delay in production isn’t likely to help GoPro much.
GoPro still runs a very profitable business, and its Hero line is still the industry standard for action cameras. The company’s newest flagship, the Hero5 Black, is the best I’ve ever used by a good margin. As such, I wouldn’t expect it’s going anywhere anytime soon. That said, the recall, just two weeks into GoPro’s first dive into a new product category, combined with production delays of the new camera, has got to hurt and hurt bad.