Why A Legal Storm Could Speed Up GoPro Inc (NASDAQ:GPRO) Buyout

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GoPro Inc

GoPro Inc (NASDAQ:GPRO) is now the target of shareholder rights attorneys as the company faces accusations of misleading investors into losses. The company’s woes have multiplied since it announced the recall of its maiden drone product billed Karma. But a legal storm against GoPro could speed up a takeover of the company.

In a fresh update, law firm Khang & Khang is reminding investors of a class action lawsuit it has brought up against GoPro. The firm has asked GoPro investors who may have lost excess of $100,000 through investment in the company stock between Sept. 19, 2016 and Nov. 4, 2016 to contact it to discuss their rights under the suit. Khang & Khang is also in the process of selecting the lead plaintiff in the class action lawsuit.

Misleading statements

Khang & Khang accuses GoPro of making a series of misleading statements that caused investors to believe that Karma would be a huge success. Further, the law firm says GoPro failed to disclose in time that the Karma drone had problems that caused it to lose power and collapse midair.

GoPro was forced to recall Karma when the problem was detected, introducing huge costs for the company. Some 2,500 units of Karma had been shipped by the time the recall was announced. GoPro said it would refund the customers and give them a Hero5 Black camera as compensation, sparking a selloff in the stock.

But the selloff and the ensuring legal battle could just be what potential buyers of GoPro may have been waiting for to acquire the company at a discount. GoPro has recently been a subject of buyout rumors with companies like Apple Inc. (NASDAQ:AAPL), Garmin Ltd. (NASDAQ:GRMN) and DJI cited as potential suitors. GoPro could also draw interest from private-equity firms.

GoPro stock slide 1% to close at $9.09 in the last session. The stock is down 50% YTD. Analysts at Piper Jaffary recently cut their price target on the stock to $8, citing a difficult holiday quarter that compelled GoPro to make huge prices concessions to encourage the uptake of its camera products.

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