Is Fitbit Stock A Good Investment? – (FIT)
Last week (September 24), Fitbit stock fell by 4.7% and Fitbit stock ended the day at $5.66 per share. On the same day, Fitbit lost $75 million in market valuation. Fitbit is still trading above its 52-week low of $4.51 and below its 52-week high of $7.79.
Fitbit Future Growth
Fitbit stock has been volatile this entire month, with its stock price plummeting 4% after Apple unveiled the new Apple Watch Series 4 on September 12. Apple’s Watch Series 4 is the largest competitor for Fitbit.
The new Apple Watch is a medical device which is fashionable. Now capable of an ECG, the watch from Apple can detect irregular heart rhythms and can even contact emergency services when the user falls critically.
By adding fall detection capabilities and heart rate sensors, the Apple Watch will be a tech device that people buy for the elderly. Although, because of its price point, it is unlikely for the Apple Watch to single-handedly replace the Fitbit. For consumers, the Apple Watch Series 4 price of $399 is far too steep, especially when considering that is just for the basic version.
If Fitbit can dominate the market of cheaper smart-watches then we may see the Fitbit stock price increase long-term. A Fitbit representative said this last week:
“We see the smartwatch category as an opportunity for many companies to be successful,”
As sales decrease for Fitbit, the company is relying on its new product launches to drive sales. Unless Fitbit can deliver a new product to market to challenge the Apple Watch, its stock price is likely to keep falling. Last week the company also unveiled Fitbit Care, a brand new health coaching platform. By diversifying its revenue sources, Fitbit are lowering risk for investors as the company is not relying one just one product to perform.
Fitbit Care, formerly Twine, is a health platform that the company had acquired previously. Fitbit Care is likely to use the Fitbit Plus app to give health metrics for consumer coaching.
Fitbit Stock Forecast
15 analysts gave Fitbit stock predictions. This is the analyst breakdown.
I current give Fitbit stock a “HOLD” rating.
The average 12-month Fitbit stock price target is $6.39, which is a low ball considering its average estimates.
In the USA, Fitbit Inc has 251.16 million shares outstanding, being held by shareholders. This includes shares being held by outside investors and internal share-holders who’s shares are restricted.
The 2015 Fitbit IPO saw the company reach a share price at nearly $50 per share, since its IPO, Fitbit stock price has been declining. Not just the stock price but the entire Fitbit company has been underperforming since it went public. Heavy losses are being posted constantly as the company is generating low revenue metrics. Despite being profitable at the time of its IPO, Fitbit may struggle to produce results in the future. A 20% decline in devices sold is a hard number for investors to ignore.
As more “smart-watches” hit the market, I expect Fitbit stock to gradually decline even further.
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