Whether an investor or a casual observer, you can’t deny that Fitbit Inc (NYSE:FIT) is a huge disappointment. The most immediate proof of this is its year-to-date performance, which sits at a sad -24%. Of course, YTD benchmarks are fairly arbitrary. At the end of the day, it’s just a comparison against a single price point.

Where FIT stock meets its chorus of dissatisfaction is in the market response. After collapsing near the end of January, Fitbit shares have made zero progress. The only positives for investors are short-lived as the company ebbs and flows. The irony is that FIT stock is getting plenty of exercise, but it’s not the kind that shareholders were hoping for.

Fitbit stock is also problematic because of broader industry headwinds. Dicks Sporting Goods Inc (NYSE:DKS) took a very ugly spill last week. The same could be said about Foot Locker, Inc. (NYSE:FL). Just based on the technical patterns, I believe more pain is on the way. But the wider implications are more concerning for FIT. Apparently, physical fitness is going out of style.

This is part of the reason why I have a dim outlook for sports apparel maker Under Armour Inc (NYSE:UAA). At the same time, I have a cautiously optimistic view on FIT stock. Shares of both companies have experienced sharp gap-downs, and are negatively tilted. Am I simply being a hypocrite, or is there a legitimate reason to believe Fitbit?

FIT Stock Has “Un-coachable” Intangibles

Generally speaking, the selective malaise in the sports and fitness category is reflective of the overall consumer retail markets. At the most basic level, some will survive, others will not. The ones that will make it out usually have some distinctive advantage.

When you look at the primary evidence, sporting goods retailers are enjoying sustained growth. Also, during the recessions of 2001 and 2008, sales for fitness and recreational centers continued to increase. This indicates that Americans — despite our love for junk food — still make time for health and wellness. Obviously, that’s an incredible boost of confidence for FIT stock and the sector overall.

So this is the deal — consumers are buying up athletic and sporting goods. The opportunity is clearly vibrant. The difference is where the money is going. Adidas AG (ADR) (OTCMKTS:ADDYY) has found the secret sauce, as evidenced by its meteoric rise this year. Its competitors, though, have a lot of catching up to do.

Adidas also understands the market. One of their big sellers is the “Yeezy” shoe, which is branded after hip-hop artist Kanye West. Adidas proved that marketing and making a connection with the consumer is just as important as creating sector-relevant products. Why I like Fitbit stock is that the company also has a unique, recognizable message.

Thus, it’s not just about piecing together a fitness device. To avoid the commoditization stigma, Fitbit has invested heavily in its social media presence. Dedicated fans now call themselves “Fitbitters.” These are the types of intangibles that may eventually drive FIT stock toward a convincing rally.

Innovation Will Make or Break Fitbit

Earlier this year, Fitbit laid off several of its workers in a bid to save around $200 million in labor costs.

But in their first-quarter earnings report, the device-maker increased research and development costs over the year-ago quarter. I think that’s a great move considering that innovation is what will make or break Fitbit stock.

I’m also enthused about CEO James Park’s push toward medical devices. According to Venture Beat, Mr. Park once remarked that FIT devices could one day “save your life.” I don’t think this is hyperbole. Renowned physicist Dr. Michio Kaku forecasts a future where “Your toilet will tell you if you have cancer.”

Given enough time, Fitbit could enjoy a bright future. Getting there is the $1.3 billion question. FIT stock has lost devastating ground to Apple Inc. (NASDAQ:AAPL), which has become the market share leader in digital wearables. Fitbit’s upcoming smartwatch is also a worrying liability considering the unflattering pre-launch rumors.

InvestorPlace contributor Will Ashworth is dead-on when he states that from a speculation point-of-view, “FIT stock is the ideal play at these prices.”

I’m willing to give it a calculated shot. First, the markets have likely priced in most of the ugliness. Second, FIT stock is different from other names in the fitness sector because it levers product and lifestyle strengths. Finally, the device-maker is investing in innovation and shifting from a saturated to a frontier market.

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