Is Fitbit Inc. (NYSE:FIT) or GoPro, Inc. (NASDAQ:GPRO) the Future of Technology?

Fitbit-GoProForget FitBit Inc. Stock; Here’s Why I’m Bullish on GoPro, Inc. Instead

We are always looking out for the next big innovation that will take the stock market. The introduction of the personal computer, the Internet, and mobile devices are a few game changing technological advances over the past three decades. Yet there are also numerous gimmicky innovations or good standalone products that have traction but are vulnerable to rising competition from much bigger players. Take two popular stocks, GoPro, Inc. (NASDAQ:GPRO) and Fitbit Inc. (NYSE:FIT), for example.

These two companies are hitting a problem faced by many startups that come up from a really neat product. Success brings notice and competitors. Some succeed. Others fail.

Both stocks have a wide following and positive support. But I’m not as convinced about their futures; at least in the same structure without any changes. Now of the two stocks, I prefer GoPro over FitBit stock. Let me explain.

Here’s My Case for GoPro Stock

GoPro has a fantastic product—having personally used it. The problem is; being essentially a one product company makes it difficult to fend against competitors.

The stock has been sold off at $27.74, well down from its 52-week high of $92.38 on concerns regarding competition. Yet with its market value dropping to around $3.68 billion, the valuation is actually intriguing at 14x 2016 EPS and a cheap PEG of 0.53.

GoPro-chart

Chart courtesy of www.StockCharts.com

The cheap valuation is tied to the fear of a one product company despite how nice the product is. I simply don’t see GoPro being able to fend off the competition. Especially from companies such as Apple Inc. (NASDAQ:AAPL) and makers of knockoffs in China.

My thinking is Apple should simply buy GoPro and integrate the innovative camera with its iPhone technology. The price would a drop in the cash chest for Apple. While this may or may not happen, it does make sense for Apple or another company such as Microsoft Corporation (NASDAQ:MSFT) or Alphabet Inc. (NASDAQ:GOOG).

Traders should consider GoPro a potential takeover target or a trade from a valuation perspective.

Why I Don’t Like FitBit Stock

I have previously discussed my negative thesis on FitBit when the stock was trading at around $31.00 back in June. The share price has since ratcheted higher to $35.00. I’m not only still negative; but even more so.

Fitbit-chart

Chart courtesy of www.StockCharts.com

My initial concern was with Apple and the iWatch, which has changed with the launch of the Microsoft Band.

Just like the FitBit, the Band is a similar wearable band that measures health and fitness. Yet unlike FitBit, the Band also integrates with the Windows Phone, Android, and iPhone allowing access to text, e-mail, and calendar alerts. The Band even measures the UV and has a golf GPS feature. The price point at $249.99 is in line with the top-end FitBit while the Band offers more punch.

Unlike the GoPro, I simply do not see why any company would take out FitBit as the product has already been made redundant by Microsoft and its significant development budget.

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