A YouTuber famous for playing horror games now owns more of GoPro Inc. (NASDAQ:GPRO) tradable stock than any Wall Street fund.
The action-camera maker has gained 50% since the start of the month, the best performance in the Russell 2000 index of small U.S. companies.
Yet, shares remain nearly 99% below their 2014 record.
Markiplier Lit The Fuse, Starman Changed The Story
The excitement began when Mark Fischbach, better known as YouTube star "Markiplier," disclosed an 8.5% stake in GoPro.
Fischbach accumulated 13.5 million Class A shares, making him the company’s largest outside shareholder.
GoPro jumped 46% on Aug. 31 as retail traders followed him into the battered stock.
But Markiplier’s arrival only set the stage.
On Sept. 1, GoPro agreed to merge with privately held Starman Optical in a transaction that will radically change what shareholders own.
GoPro investors are set to receive $285 million in aggregate cash, or $1.14 per share, subject to a working-capital adjustment.
They will also retain roughly 10% of the combined public company.
The agreement would repay GoPro’s approximately $92 million of debt at closing. It would also add Starman’s U.S.-made optical transceivers to the product portfolio.
Those components move data through fiber-optic networks and are critical to AI data centers.
The combined company also plans to pursue defense, government, robotics and aerospace customers.
A Short Squeeze Did The Rest
GoPro’s heavy short interest amplified the move.
Short sellers borrow shares and sell them, betting they can buy them back later at a lower price. When the stock rises instead, they have to buy shares to close their positions and limit losses.
That buying can push the price even higher. Traders call this a short squeeze.
According to FINRA data, 30.58 million GoPro shares were sold short as of Aug. 31.
That was 20.2% of the public float, the shares freely available to trade.
A Rally Built on Sand?
The stock’s explosive performance should not be confused with an operating turnaround.
GoPro’s second-quarter revenue fell 31% year over year to $105 million. Camera sales declined 38% to roughly 291,000 units.
The company lost $51 million, compared with $16 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization were negative $29 million.
Rising memory-chip prices, driven by the AI data-center buildout, squeezed margins further. Competition from DJI and Insta360 took market share.
There is one brighter spot.
Subscription and service revenue rose 11% to $29 million, representing 28% of total sales. The subscriber attachment rate reached a record 69%.
Still, those recurring revenues were not enough to offset collapsing hardware demand and mounting losses.
Even after the rally, the stock is down about 8% this year.
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