GoPro and Lemonade: Two Small-Cap Stocks to Watch in 2024

Introduction:
The benchmark S&P 500 index has delivered impressive returns of 24% in 2023, significantly outperforming its average of 13.7% over the last 10 years. However, the majority of this year’s gains have been driven by a group of mega-cap technology stocks known as the “Magnificent Seven.” These stocks, including Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla, and Meta Platforms, account for 28% of the value of the S&P 500 and have had a significant impact on the overall direction of the market.

Small-cap stocks, on the other hand, have been left behind. The Russell 2000 index, which measures the performance of smaller companies, has delivered a return of only 13% in 2023, underperforming the S&P 500 by a wide margin. This is largely due to the fact that small companies are more vulnerable to economic turbulence and require access to capital to grow, which can be difficult during times of high inflation and rising interest rates.

Despite this, there are two small-cap stocks that have been overlooked by Wall Street but have the potential to soar in 2024: GoPro and Lemonade.

GoPro: Unlocking New Revenue Streams
GoPro is a company that specializes in selling action cameras, with its products priced at $399 each. However, in 2023, the company’s stock has fallen by 30% due to the challenging economic climate, making it an attractive investment opportunity.

One of the reasons why GoPro could be a good investment is its potential to unlock new, high-margin revenue streams. While selling action cameras is a competitive market, GoPro has the opportunity to expand its offerings and generate additional revenue from other sources.

For example, GoPro could focus on developing software and services that complement its hardware products. This could include offering subscription-based services, such as cloud storage for users’ videos, or creating software tools that enhance the editing and sharing capabilities of GoPro footage.

Another potential revenue stream for GoPro is licensing its technology to other companies. GoPro has already partnered with companies like DJI, the world’s largest drone manufacturer, to integrate its camera technology into DJI’s drones. By continuing to develop partnerships and licensing deals, GoPro could generate significant revenue without relying solely on the sales of its action cameras.

Lemonade: A Promising Insurtech Startup
Lemonade is a New York-based insurtech startup that offers homeowners and renters insurance. The company has been growing rapidly, with its customer base increasing by 150% in 2023. Despite this growth, Lemonade’s stock has only attracted one buy rating from Wall Street analysts, making it an undervalued investment opportunity.

One of the key factors that sets Lemonade apart from traditional insurance companies is its use of artificial intelligence (AI) and machine learning algorithms to streamline the insurance process. Lemonade’s AI-powered platform allows customers to purchase insurance policies quickly and easily, with claims being processed in just a few minutes.

Additionally, Lemonade has a unique business model that sets it apart from traditional insurance companies. The company operates on a “giveback” model, where any unused premiums at the end of the year are donated to charities chosen by the customers. This not only helps to build customer loyalty but also differentiates Lemonade from its competitors.

Conclusion:
While GoPro and Lemonade may have been overlooked by Wall Street, both companies have the potential to generate significant returns for investors in 2024. By focusing on developing new revenue streams and leveraging technology to improve their offerings, these small-cap stocks could be poised for growth in the coming year.