Fitbit, Inc. Still King of Fitness Trackers
Despite the disappointing performance from Fitbit, Inc. (NYSE:FIT), FIT stock is looking promising ahead of the holiday season.
According to a recent survey of 4,500 U.S. consumers in the first week of November, 24.5% of respondents indicated that they plan to buy a fitness tracker in the next three months. Moreover, among those planning to buy fitness tracking devices, 49.2% said they would get one from Fitbit. (Source: “Fitbit, Apple Watch Demand up Ahead of Holidays,” Investors.com, November 20, 2015.)
Fitness trackers are gaining in popularity these days. In December 2014, only 14% of survey respondents had plans to buy fitness tracking devices. By August of 2015, this number went up to 21.5% and then to 24.5% in November.
While the market for fitness trackers is growing, Fitbit is also on its way to capture more market share. The survey in December 2014 showed that 35.6% of respondents wanted a Fitbit device. The percentage has since grown to 44.3% in August 2015 and to 49.2% in November.
The survey also confirms Fitbit’s leading position in the fitness tracker industry. Around 25% of survey respondents said they already own a fitness tracking device of some sort, with Fitbit ownership being the largest at 11.3%. The company’s competitors did not enjoy that kind of success, with Garmin Ltd. (NASDAQ:GRMN) coming in at 3.7%, 2.4% for Apple Inc. (NASDAQ:AAPL), and 1.9% for Jawbone.
Fitbit Not Afraid of the Apple Watch
There have long been concerns that smartwatches would pose a threat to fitness tracking devices. If the “Apple Watch” can act as a fitness tracker and has so many other functions, would consumers just go and get the Apple Watch? Not really.
You see, although smartwatches can do many things other than tracking people’s activity, they are also heavier, more expensive, and have much less battery life compared to traditional fitness trackers. For instance, the Apple Watch starts at $350.00, while Fitbit’s devices start at $60.00. The Apple Watch requires charging every night unless you just use it to tell the time. Fitbit’s products require a lot less charging; the “Fitbit Surge” can last around seven days, while the “Fitbit Charge” can last as long as 10 days.
As a company, Fitbit, Inc. is doing more than fine. FIT stock, however, hasn’t been that great lately. Since its peak of $51.90 a share on August 5, 2015, Fitbit’s stock price has plunged more than 48%! However, analysts are starting to notice the value of this company.
According to data provided by Zacks Investment Research, among the 17 firms making recommendations, nine rated Fitbit as a “Strong Buy,” two rated it a “Buy,” while the remaining six rated it a “Hold.” Note that none of the analysts issued an “Underperform” or “Sell” rating for FIT stock. (Source: “Fitbit Inc. Analyst Stocks Recommendations,” NASDAQ web site, last accessed November 23, 2015.)
Most recently, Bank of America Corporation analyst Nat Schindler upgraded Fitbit to a “Buy” rating. He noted that with the holiday season coming up, Fitbit’s sales guidance for the fourth quarter looks quite conservative. The analyst also said that the most important factor behind the upgrade was the “underwhelming” lineup of new fitness trackers launched by Fitbit’s competitors. When competitors cannot come up with products to pull customers way from the incumbent, success is likely to continue for Fitbit. (Source: “Analyst Pans Competing Products, Says Buy Fitbit,” TheStreet.com, November 17, 2015.)
The Bottom Line on FIT Stock
Since Fitbit’s IPO on June 18 of this year, the company has reported two solid seasons of growth. In both the second quarter and the third quarter, revenue was up by triple-digit numbers year-over-year. Internationally, the company is doing spectacular, with Asia-Pacific revenue skyrocketing 314% in the third quarter.
Looking forward, the company’s results might also get a boost from its corporate health business. All this suggests that FIT stock might start to climb back up.