Add yet another “miss” for Fitbit Inc (NYSE:FIT) in what has so far been a miserable 2017. FIT stock was off 3% on Tuesday — bringing shares down more than 20% year-to-date amid a Yahoo Finance report saying that “production mishaps” will delay the release of Fitbit’s smartwatch and Bluetooth headphones.
Struggling Fitbit had generated at least some excitement over the prospects of its first-ever “proper” smartwatch, but issues linked to its GPS have not only marred the project, but apparently forced a complete redesign to get the feature to work.
Per the report:
“Fitbit’s design team also ran into problems making its smartwatch fully waterproof, even though that’s a key design element for the Apple Watch Series 2. Indeed, it’s still unclear as of the publication of this article whether the device will launch with the waterproof feature. If it isn’t waterproof, critics may perceive it to be an inferior product to Apple’s — especially given that the device will launch roughly a year after the Apple Watch Series 2.”
FIT Stock Is in Serious Trouble … Again
Fitbit shares are in utter collapse, off roughly 90% from its August 2015 peak that came just months after its initial public offering. It hasn’t been for lack of growth (yet), with the company growing the top line in each of the past three years, including a 17% year-over-year improvement in 2016.
However, profitability has been inconsistent, and this fiscal year is expected to be dour, with analysts expecting not just a 35-cent loss, but a 27% decline in revenues to roughly $1.6 billion.
You can blame a few issues, not the least of which is Fitbit’s lack of a “true” smartwatch. The Fitbit Blaze, which was revealed in early 2016, was a huge disappointment that despite looking like a smartwatch was just a glorified fitness tracker, like the rest of FIT’s products. No third-party apps, no calling features and no internal GPS — something Fitbit’s next smartwatch was expected to fix.
Worse, Fitbit finds itself in a field that’s not only crowded — competitors include Apple Inc. (NASDAQ:AAPL), Samsung (OTCMKTS:SSNLF) and Xiaomi, to name a few — suddenly has a visible ceiling. While a recent IDC report pointed out that Fitbit maintained its dominance in the wearables market, “the company also faced one of its largest declines ever as it remained heavily focused on the U.S., a market that is quickly approaching saturation for fitness trackers.”
Today’s loss hasn’t done any real technical damage, if only because Fitbit was weak enough as it was.
FIT stock has been battling with its short-term 20-day moving average over the past few weeks, climbing over it only to fall several times. Meanwhile, the 50-day MA has been in constant decline and is threatening to provide even more overhead resistance, camping just a couple percent higher at the moment.
Fitbit’s next chance at any sort of redemption will come Thursday, May 4, after the close of trading, when it reports quarterly earnings … though at this rate, it could just be the next catalyst that sends shares even lower.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
