Shares in Fitbit Inc (NYSE:FIT) remain just pennies above an all-time low and investors can’t count on the holiday selling season to give FIT a lift anytime soon.
The leader in wearable fitness had a very mixed Black Friday, and that points to an acceleration of current unfriendly trends. FIT was the best-selling name in its product category on Amazon.com, Inc. (NASDAQ:AMZN) and Target Corporation‘s (NYSE:TGT) web store, but that comes with an asterisk.
The only reason FIT came in No. 1 was because of discounting, which hurts already vulnerable margins. It’s also clear that the name is ceding market share to rivals. Longbow research notes that searches for Fitbit online on Black Friday were down 11% vs. last year.
True, wearables saw a big spike in interest year-over-year. Target said it saw a 50% spike compared to Black Friday 2015. However, that’s off a small base. There’s still no compelling evidence that it can be more than a niche market.
Certainly nothing Fitbit has done would argue against that conclusion.
When the most important name in the product category goes into the all-important holiday season fresh off a crumby earnings report and weak guidance, you know wearables have a long way to go to become mass market.
The company all but threw in the towel on the final quarter of the year weeks ago, with profit and revenue forecasts well below Wall Street’s forecast.
FIT expects fourth-quarter revenue to come in between $725 million and $750 million, down from previous estimates of $985 million. Earnings per share for the year are now pegged at 55 cents to 59 cents a share. That’s a whopping cut to the prior outlook which stood at EPS of $1.12 to $1.24 a share.