Fitbit Shares Climb 50%, Giving a $6.0 Billion Valuation
Shares of Fitbit Inc. (NYSE/FIT) soared during its first day of trading, signaling that investors are optimistic on the future of wearable devices.
On Thursday, June 18th, Fitbit received a warm welcome from the stock market on its initial public offering (IPO). The stock price for the fitness tracking device maker surged 50.55% to $30.10 in mid-day’s trading.
When Fitbit first filed for its IPO, the company expected its IPO price to be between $14.00 and $16.00 a share. Soon after, the price range was raised to $17.00 to $19.00. The final price for its IPO was raised again to $20.00 a share, giving Fitbit a $4.1 billion valuation. Fitbit’s already-high valuation surged to more than $6.1 billion as its stock price gained more than 50% on its first trading day.
Fitbit: A Company that Actually Makes Money
Wearable technology companies are getting attention from investors. Fitbit has a solid sales record. Revenue increased steadily from $14.5 million in 2011 to $745.4 million in 2014. Fitbit also turned profitable last year, having a net income of $131.8 million.
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The upward momentum has continued into this year. Revenue came in at $336.8 million for the first three months of 2015, with a net income of $48.0 million.
Wearable Technology Gaining Popularity, More Competition to Come
Fitbit is not the first wearable technology firm to go public. Last June, action camera maker GoPro, Inc. (NASDAQ/GPRO) went public. GoPro’s stock price surged 30.6% on its first day of trading. On Thursday, the company’s shares closed the trading session at $58.06 a share, enjoying a gain of more than 100% in 12 months.
Despite Fitbit’s recent success, the segment is getting increasingly competitive. Its existing competitors Garmin Ltd. (NASDAQ/GRMN), Samsung, and Jawbone have been offering a variety of fitness trackers for a while now. Apple Inc.’s (NASDAQ/AAPL) recently-unveiled Apple Watch can also function as a fitness tracking device. Microsoft Corporation (NASDAQ/MSFT) is also joining the game with the Microsoft Band.
A huge competitor is joining the industry from China. Xiaomi Inc., the Chinese cell phone maker, entered the fitness tracker industry last summer. The launch of its ultra-cheap $14.99 “Mi Band” gave Xiaomi a huge following. The company shipped 2.8 million units of “Mi Band” in the first quarter of 2015, capturing 24.6% of the market.
