Shares of Fitbit Inc (NASDAQ:FIT) are taking a beating lately. After an impressive sprint out of the gate following its initial public offering (IPO) last July, FIT stock has nosedived. In the last week alone, Fitbit stock has plummeted about 25% after lower-than-expected guidance for the first quarter in 2016. Since the start of the year, FIT stock is down about 60%.
Fitbit might be beaten by investors, but don’t count it out. If you believe in a quality business, with shares on sale, then Fitbit might be a company worth looking at a little closer. Here’s why.
FIT stock is well positioned to take advantage of the wearable devices market, which is undergoing explosive growth. The wearables market sector is expected to grow from $15.0 billion in 2015 to $25.0 billion by 2019. (Source: “Wearable Tech Market To Treble In Next Five Years,” Forbes, October 29, 2015.) That’s a growth rate of 64%.
Also, Fitbit has a dominant position in the market. According to International Data Corporation, FIT stock commands about 30% of the wearable device market, almost twice as much as second-place Apple Inc. (NASDAQ:AAPL). (Source: “The Worldwide Wearables Market Leaps 126.9% in the Fourth Quarter and 171.6% in 2015, According to IDC,” International Data Corporation, February 23, 2016.)
At the end of 2015, Fitbit’s devices were only selling in 48,000 retail outlets in 55 countries. (Source: “Fitbit Reveals Fitbit Blaze – The Smart Fitness Watch That Empowers Consumers to Get Fit in Style,” Fitbit Investor Relations, January 5, 2016.) The U.S. comprised about 74% of revenue in 2015, so there is still plenty of room to grow overseas. The company just started to sell its products in China and India, which should be a boon to sales.
Sales of Fitbit products are also growing rapidly. In the latest quarter, revenue in the U.S. grew 100% year-over-year, but growth internationally wa