On Thursday morning last week, we saw the highly anticipated debut of wearable technology stock Fitbit Inc. (NYSE/FIT), a maker of wearable bands for monitoring health and fitness.
After the company rang the opening bell at the NYSE, the initial private investors and other lucky shareholders made a fortune. This is generally the case with popular, hyped-up IPOs.
Fitbit opened at $30.40, up 50% from its subscribed price, and much higher than what the initial investors paid to get in early. The stock ran as high as $31.90 and as low as $29.50 Thursday morning.
Now, while many will get rich from the IPO, I would be more concerned if I had shares vested that couldn’t be sold at this point. Here’s my thinking: while the stock could clearly climb higher, I also see a competitive operating environment for wearable technology stocks.
Why My Favorite Wearable Technology Stock Isn’t Fitbit
If I were a shareholder in Fitbit, my main concern would center around none other than Apple Inc. (NASDAQ/AAPL). If it seems like Apple is destroying many companies, it’s because it is.
Fitbit will have to contend with the newly launched “Apple Watch,” which has garnered positive accolades and, in my view, is in direct competition with the “Fitbit” bands.
The reality is that the Apple Watch offers much of the same functions and much more than the Fitbit band. Yes, the market for these wearable technologies is rapidly growing, but as an investor, I would not be betting against Tim Cook and Apple.
The Fitbit band ranges in price from $59.95 to $249.95. The bands come in various levels; from everyday to active. The higher-end performance version is equipped with a GPS and a heart rate monitor (HRM). The bands can also monitor how you sleep.
When I look at the bands, I really don’t see anything special or game-changing. My fitness watch that I use for running incorporates a HRM, GPS, calorie counter, and other functions. So, again, nothing is really unique about the Fitbit.
The only way I can see the Fitbit bands doing better is if people wear them as an image piece. And I don’t see that happening. In fact, the Apple Watch is becoming the must-have wearable device.
Research firm Slice Intelligence estimates that there have been 2.79 million Apple Watch sales as of last week. (Source: Reuters, June 18, 2015.)
That’s a staggering amount, given the watch was just launched. If I were Fitbit, I would be somewhat nervous about Apple. And as an investor, I would always want to be sticking with the best of breed. Guess who that is?