Fitbit Inc (FIT), the leader in wearable fitness-tracking devices, went public earlier this year to much fanfare. The Fitbit initial public offering priced at $20/share, and by the end of the first day of trading shares had rallied 50% and were trading around $30 a pop.
The stock is up 15% since then, currently in the low-to-mid $30s. Although that’s a long way from its peak around $52/share, it wouldn’t surprise me at all if FIT stock got back to those levels in 2016.
Fitbit has already proven itself surprisingly resilient. Much larger competitors with vastly more resources, namely Apple (AAPL), Garmin (GRMN) and Samsung (SSNLF), have been unable to dethrone Fitbit as the de facto “King of Wearables,” and IDC pegs the company’s leading market share at 22.2%.
That bodes well for Fitbit stock, which I believe is primed to rally in 2016 for a few reasons, one of them being new comments from CEO James Park, who gave several hints about new product features on Friday.
Blood Pressure, Stress Monitoring
The next iteration of Fitbit devices will do more than just monitor your heart rate, the distance traveled, calories burned and the like. Said the man who took FIT stock public, CEO James Park:
“I can’t talk specifically, but things people are going to be interested in in the future are blood pressure, or stress, or more stats about their athletic performance.”
Sure, that’s not the most revealing piece of info. Park saved that for later in the Friday TIME interview. As for how Fitbit features would evolve going forward, he said:
“Up to this point it’s been about gathering as much data as we can and the presentation and the visualization of that data. Now I think a lot of that effort is going to go into making that data actionable, whether it’s through coaching, insights, or guidance.”
That could also mean third-party apps and collaborations, said Park, which would amount to another revenue stream for Fitbit.
Even before the most recent interview with Park, Wall Street analysts were predicting big things for FIT stock. Piper Jaffray said in a note a week ago that it thought Fitbit stock had enormous upside potential, and that the stock could rally to $60/share within a year.
At the time, that was a 116% premium to the Fitbit stock price.
The rationale? While other retailers were deeply discounting their products over the Black Friday/Cyber Monday holiday shopping period, FIT was hardly promotional by comparison. Jaffray mentioned that in London, Fitbit products at John Lewis were full priced over the shopping holiday, while direct competitors Misfit and Withings were discounted 65% and 25%, respectively.
As time marches forward, and the highly anticipated Apple Watch remains an open joke, Fitbit remains best-in-class in the wearables segment. Going into 2016, its corporate wellness initiatives should keep giving FIT some high-volume enterprise clients, just as its products improve to measure more metrics, provide more actionable advice, and allow more third-party penetration.
Sounds like a winning formula to me.
As of this writing, John Divine was long FIT stock and AAPL stock. You can follow him on Twitter at@divinebizkid or email him at editor@investorplace.com.
