As we edge towards the end of the first quarter, it’s quite apparent that 2016 isn’t the go-go market we’ve been used to seeing in recent years. To observe the new, more conservative investment environment, one need look no further than Fitbit Inc (FIT) stock, which is off 56% year-to-date.
Unlike fellow consumer tech stock GoPro Inc (GPRO), Fitbit didn’t drop the ball and forget to execute. The two companies have been compared a lot recently because both FIT stock and GPRO have suffered violent selloffs, and both companies sell niche wearable tech products.
The difference is, GoPros stopped selling, while Fitbits are still flying off the shelves. Fitbit has beaten earnings and revenue estimates in each of its first three quarters as a publicly traded company, and last quarter sales surged 92%.
And with the San Francisco, California-based company’s first-ever smartwatch just hitting the markets now, the future looks pretty bright, too. Expect the Fitbit Blaze to sell well — and to catapult FIT stock higher in 2016.
Fitbit Stock Has Bottomed
The Fitbit Blaze will light a fire under FIT shares for a few reasons. The fact that it’s Fitbit’s first attempt at a smartwatch alone is significant, and means that it should eat some of Apple Inc.‘s (AAPL) Apple Watch market, especially at a modest price point of $200, notably cheaper than the Apple Watch Sport.
It’s compatible with not just iOS, but Alphabet Inc‘s (GOOG, GOOGL) Android and Microsoft Corporation‘s (MSFT) Windows 10 Mobile operating systems as well. Link the Fitbit Blaze to your phone and you’ll see your texts appear on Fitbit’s first-ever color touchscreen, and you can also play, skip, and pause songs as well as control volume through your Blaze.
Fitbit stock may already be benefiting from the product’s early reception: FIT stock has bounced off its all-time lows below $12/share, and has done so just as the Fitbit Blaze has ascended toward the top of the “fitness tracker” category on Amazon.com, Inc. (AMZN).
One of the Blaze’s most impressive stats is its five-day battery life, a convenience that more than makes up for an awkward charging process (users remove the watch from its frame and then have to put it back in.
On top of the impressive battery life and text message and music integration, the lightweight and comfortable Blaze can automatically recognize whatever physical activity you’re doing, and records that activity in your log. Like other models, it tracks your steps, calories burned, floors climbed, etc. The Blaze also has a number of exercises that it shows you how to do and lets you follow along with.
Given the generally positive early reviews, the modest price and several new features, the Blaze should definitely be a boon to FIT stock and Fitbit shareholders.
Especially when the stock trades at criminally low levels.
Bottom Line for FIT Stock
Despite repeatedly crushing earnings and revenue estimates, FIT stock trades for just 9 times forward earnings, nearly doubled revenues in the fourth quarter, and is so cheap it could actually be acquired in an M&A move.
There are more than enough reasons to buy Fitbit stock as it rebounds off of all-time lows … the Fitbit Blaze is just the most recent one.
As of this writing, John Divine was long FIT and AMZN. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
