Fitbit Inc Wins a Round Against Apple Inc., But Danger Still Abounds (FIT AAPL)

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Fitbit Inc (FIT) shareholders should be rightfully pleased that the FitBit Blaze appears to be more popular than Apple Inc.’s (AAPL) Apple Watch, but FIT stock has to contend with more than just that.

Fitbit Inc (FIT) Wins a Round Against Apple Inc (APPL), But Danger Is Still AboundFitbit shipped more than 1 million FitBit Blaze devices last month, which exceeded the company’s forecasts. FIT was proud to say that Fitbit Blaze is the No. 1 bestselling device in both the smartwatch and heart monitor categories on Amazon.com (AMZN), where the vast majority of customer reviews give it a 4- or 5-star rating.

Fitbit Alta is also off to a strong start.

This is unreservedly good news. FIT’s 2016 product cycle is off to a strong start with Fitbit Blaze outselling Apple Watch on the most important e-commerce site on the planet.

But let’s not get carried away.

Fitbit Blaze and Apple Watch aren’t directly comparable devices. It’s not quite a case of … apples and oranges, but these gadgets are aimed at somewhat different targets.

FIT doesn’t even call the Blaze a smartwatch. Rather, it’s a fitness watch. It does a lot of neat things, but it’s more narrowly focused than Apple Watch. That’s not a criticism. It’s just a different approach.

FIT Blaze vs. Apple Watch

Blaze allows users to do things like reject or accept calls, receive notifications from emails and control music playback. Apple Watch goes farther, with notifications for third-party apps, the ability to control notifications and the ability to download music for offline playback. Want to ask Siri a question? It handles that too. And then there’s the ability to add widgets.

The hardware specs favor Apple Watch as well. It sports a higher resolution OLED screen protected by sapphire crystal glass. Fitbit opts for a more pedestrian LCD screen with Gorilla Glass 3 coating.

The point is that Apple Watch is designed to give users more tech (but not more battery life). FIT is taking a different course. It’s more of a straight-up fitness device. Plus — and this is a big deal — the Blaze is significantly cheaper than Apple Watch. That’s always good for sales.

Beating Apple Watch is far better than the alternative, but it’s not Apple’s not the only competitive worry right now. It might even be the wrong yardstick. Sales of Apple goods through Apple stores make it hard to reach conclusions from whatever’s happening on Amazon. And, again, these devices aren’t perfectly comparable.

If you hold FIT stock, keep in mind that there’s far more competition out there than just Apple. The bad news is that FIT has to battle Samsung (SSNLF), Garmin Ltd. (GRMN) and Xiaomi, among others. The good news is that the wearables market is growing so fast that it’s not a zero-sum game.

Besides, the market’s biggest concern right now is rising costs as FIT makes its first big global marketing and production push. It’s an expensive gamble. The market hates uncertainty.

If FIT’s ambitions for Blaze and Alta go as planned, we’ll finally get multiple expansions in FIT stock. If you’re a fan of Fitbit stock, this looks like a make or break year. If you can’t accept high risk and volatility, stay away.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/04/fitbit-fit-stock-apple-watch/.

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