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Easily the Sexiest IPO of the Last 41 Filings

At the end of 2013, when the hype over Twitter (TWTR) finally died down, I issued a warning for 2014…

I stated, “If you thought Twitter was bad, you ain’t seen nothing yet.

In other words, we’ll see even more private tech companies go public in 2014.

That was quite a bold statement, given that 2013 was a banner year for tech IPOs. In fact, it was the most active in six years, with 82 companies raising $11.25 billion in IPO money, according to the National Venture Capital Association.

Those are some hard numbers to beat…

But just two weeks into February, the market is churning out IPOs at a dotcom-era pace.

Renaissance Capital says that 31 tech IPOs (predominantly biotechs) have already launched in 2014 – up 72% from this time last year.

And 41 more filings are underway. Including a company that makes some hugely popular video equipment.

The question is: Will it be an IPO stud or dud?

From $64,000 to $500 Million

Last Friday, video camera maker, GoPro, quietly filed its IPO with the Securities and Exchange Commission.

When CEO Nick Woodman founded the company, he did so with $64,000 of his own capital. With a further $100,000 investment from his father, the California company has grown strongly, and estimates suggest the company will go public with a valuation between $300 million and $500 million.

GoPro’s products are sold in more than 50 countries. And leading the charge are GoPro’s Hero devices, which have pioneered a new market within the wearable technology space.

Now, as you know from my previous articles (here, here and here), wearables are extremely hot right now, with projections calling for it to become a $50-billion market by 2018.

GoPro fits right into this market.

Its Hero camera – with a small, extremely durable, wide-angle lens – was originally popular among extreme athletes, who mount them on their helmets while skydiving and bungee jumping, or onto their surfboards and snowboards.

It’s the same camera that Felix Baumgartner used to film his incredible freefall to Earth from 127,852 feet in outer space.

But crucially, everyday adventurers are using them, too. Case in point: I recorded some of my CES 2014 footage with a GoPro Hero 3+.

Another big selling point: Users can capture events in real time and then immediately share the footage on social media platforms like YouTube. It’s known as “life logging.”

Of all the life-logging cameras that shipped last year, GoPro utterly dominated its peers by accounting for four million out of the five million cameras sold.

Result: GoPro has doubled its sales every single year and scooped up over $500 million in 2012 – a figure that’s expected to double again when the 2013 numbers are in.

It’s safe to say that GoPro is the go-to camera.

However, with smartwatches, smart glasses and fitness bands hogging the wearable limelight, GoPro has been ignored.

Mistake? Let’s see…

The Big Boys Are Circling

The IPO has garnered some serious attention. JPMorgan Chase (JPM) is quoted as the lead underwriter, but sources say Citigroup (C) and Barclays (BCS) could get involved, too.

Plus, GoPro’s financing included $200 million from Taiwanese desktop and color monitor OEM, Foxconn (Taiwan: 2354), famously known for manufacturing Apple’s (AAPL) iPhones and iPads. That investment valued GoPro at $2.3 billion.

That’s pretty bold, given that GoPro hasn’t completely opened its books. The company has opted to take advantage of a provision in the JOBS Act, which grants private companies the right to file confidentially, as long as they’re generating under $1 billion in annual revenue.

Other companies, like cloud storage provider, Box, and online marketplace, Care.com, took advantage of this when they filed their IPOs last month.

So with GoPro not fully opening its books until just before shares hit the open market, can we properly evaluate its IPO?

GoPro… or Go Home?

While GoPro is a heavyweight in its field, the company does face serious competition from even bigger heavyweights.

For example, Google (GOOG) with its Glass eyewear… Samsung (SSNLF) with its Galaxy Gear smartwatch… Garmin (GRMN) with its GPS VIRB action camera… and Sony (SNE) with its Action Cam.

However, there’s another heavyweight that GoPro reminds me of… Apple.

Like Apple, GoPro has an exceptionally loyal fan base. GoPro users love their devices, thanks to the brilliant technology.

And like Apple, GoPro markets its products and brand name brilliantly…

GoPro has done a great job of promoting its products in the mainstream media, with attractive displays in stores, too.

It also sponsors several professional athletes, including those at the current Sochi Winter Olympics – snowboarding great, Shaun White, and slalom skier, Julia Mancuso.

The company has even turned its name into a verb!

Just like you “Google” something, “Going GoPro” is widely used by GoPro customers.

The company’s strong brand, loyalty and marketing make it the dominant leader in the field.

As for the IPO verdict…

The Un-tangibles

When you think about some high-profile tech IPOs that flopped, there’s a common denominator: They don’t physically make anything. Rather, they depend on users’ repeated website visits and advertisers’ continued business.

Consider Facebook (FB), Groupon (GRPN) and Zynga (ZNGA) – all firms at the whims of both users and advertisers. And we all know how fleeting that relationship can be.

On the other hand, not only does GoPro make tangible products, it’s also looking to expand its product lines.

For example, the GoPro 3 already offers wireless capabilities. But the company could also push into areas like wireless microphones, photo-editing software, or other wearable devices.

Ultimately, I like GoPro’s IPO prospects, and you should, too.

But I realize that IPO investing isn’t for everyone. So stay tuned for my next issue, where I’ll give you another savvy way to grab a piece of the GoPro IPO.

Your eyes in the Pipeline,

Marty Biancuzzo

Marty Biancuzzo

, Technology Analyst

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