FIT Stock: Is It Time to Dump Fitbit, Inc.?

Time to Dump FitbitFIT Stock Could Rebound Once the Dust Settles

It was all fine and dandy for Fitbit, Inc. (NYSE:FIT) until last week, when the world started falling apart for FIT stock. That’s when the company took a major misstep that landed Fitbit stock in hot waters.

The mega event of the Consumer Electronics Show 2016 (CES 2016) was underway in Las Vegas, when Fitbit first revealed its new product, the “Fitbit Blaze.” A new fitness tracker with a touchpad for a watch dial and priced at $200.00, management decided to call the Blaze a “smart fitness watch.”

You see what they did there? Fitbit management used “smart” and “watch” in one breath.

Everything was fine in the beginning—lots of thumbs up from the techies present at the event and a bunch of initial good online reviews on a handful of tech web sites. But then everybody started questioning how this fitness tracking wearable could be called a “smartwatch”—something the tech world was accustomed to calling a much technologically advanced “Apple Watch.” This is where things went south for Fitbit.

As soon as the market picked up on this, the negativity surrounding this release snowballed. They say that if you repeat a lie a thousand times, it becomes the truth. That’s precisely what happened here. Looking beyond all of its merits, the market discredited the Fitbit Blaze merely for being defined as a smartwatch.

This has been repeated on and on for the last week until the bulls gave in to the bears.

Did Fitbit Stock Deserve This Sell-Off?

We’ve seen similar instances before where management has miscalculated its moves by not properly aligning a company’s products with the right target market. Take the example of GoPro, Inc., which took a major hit when the company twice slashed the price of its new product within six months of its launch after having initially overpriced it.

Now, we have seen how the stock market has responded to Fitbit Blaze, but it still remains to be seen how the consumer market will respond to the same, because ultimately, that’s where the company’s revenue is generated.

I’m certain that the lower price point will definitely drive demand for this wearable since it goes beyond just an average fitness tracking device to an affordable smartwatch now—something that easily clicks with the average wearable-technology buyer.

Also, I’m going to give Fitbit the benefit of the doubt here. Management may have exaggerated their description a little, but their premise wasn’t wrong altogether. Seeing the growing consumer interest in smartwatches, management decided to offer something with a feel and appeal similar to that of the more expensive Apple Watch, without giving up on Fitbit’s originality. There’s nothing wrong in that!

Let’s also keep in mind that Fitbit is still an industry leader when it comes to total sales in the wearables industry, beating Apple and Xiaomi and far outpacing the likes of Garmin, Jawbone, and Microsoft.

The Bottom Line on FIT Stock

While I’m a little disappointed at Fitbit management’s miscalculated move to define Blaze as something it couldn’t fully live up to in the tech world, I’m also certain that the product will not be a dud in the consumer market.

Looking at the way the company has been raising money through secondary offerings, while stepping up investment in research and development. I’m more than hopeful that the Blaze will not be the only Fitbit product we’ll see this year. Last year alone, the company released at least three trackers. The Blaze is certainly just the beginning; there’s very likely more to come from FIT stock in 2016.

Holders of Fitbit stock should sit tight and not lose hope. The market is just plain wrong this time!