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GoPro dives 5% following drone recall

GoPro Karma drone
Josh Edelson | AFP | Getty Images
GoPro Karma drone

Shares of GoPro fell 4 percent Wednesday after the company recalled its new drone ahead of the holiday shopping season.

About 2,500 Karma drones purchased by consumers since Oct. 23 will be recalled after reports the gadget can lose power during operations, GoPro said. No injuries have been reported.

Retailers will offer full refunds on the returned drones, and GoPro will resume shipment when the issue is resolved, CEO Nick Woodman said in a statement late Tuesday. The product had already faced delays much of this year.

At one point Wednesday, the stock fell as much as 10 percent. The California-based consumer electronics brand has seen shares of its stock fall more than 36 percent in the past month, after sorely disappointing Wall Street with its quarterly financial results.

GoPro reported a third-quarter adjusted loss of 60 cents a share on revenues of $241 million, badly missing the Thomson Reuters consensus estimate of 35 cents per share on revenues of $319 million. Shares were halted the night of the earnings report, and then plunged 20 percent.

Woodman told investors in the earnings report that the company would return to profitability in 2017. But the once-dominant camera maker has faced competition from Chinese rivals, amid improving resolution and durability of mainstream smartphone cameras.

Wall Street expected GoPro to sell about 52 million drones and other products during the December quarter, according to Factset.

Piper Jaffray analyst Erinn Murphy called the recall "but another ding on management's credibility." CNBC reached out to GoPro for comment.

"Not only were we surprised by the modest level of initial units sold, but we believe it is a possibility that Karma will not be available for the key holiday season," Murphy wrote in a Tuesday research note.

— CNBC's Antonio José Vielma contributed to this report.