Fitbit Inc (FIT) Stock Is Unfit for Investment

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Wearables pioneer Fitbit Inc (NYSE:FIT) has had a rough ride over the past year as FIT stock plummeted over 60% due to rising competition in the space. While it pays to be first, it’s much more important to be best — just ask Blackberry Ltd (NASDAQ:BBRY).

FIT Stock: Fitbit Inc (FIT) Stock Is Unfit for Investment

Fitbit’s strong brand recognition is just about all the company has going for it at the moment, and investors hoping that the firm’s forays into the healthcare space and developing its own app store are likely to be very disappointed. FIT stock is looking unrecoverable at this point, and traders would be wise to abandon ship as soon as possible.

Fitbit Faces Tough Competition

Perhaps the biggest threat to FIT’s business is the rising competition from more competent smartwatches. While it’s true that many people are still after just a regular activity tracker that doesn’t do much else, the number of folks who are willing to invest in a device that already appears to be behind the curve is dwindling. Apple Inc.’s (NASDAQ: AAPL) smartwatch and Android’s Android Wear devices offer a slew of features that make Fitbit’s attempt at a competing product, the Blaze or Surge, look like a children’s toy.

Sure, FIT CEO James Park has promised that the firm will beef up its app offerings by creating its own app store, but I think it’s a bit late for that. Given the choice between a device that integrates with their existing smartphone and apps and one that comes with its own range of apps, consumers will probably pick the easier, more seamless integration that an Android Wear or Apple Watch device offers.

Fitbit has been able to compete on price so far, but now that we are talking smartwatches rather than just fitness trackers, that price advantage is slipping away. Fitbit’s smartwatch will set you back around $200, while the Apple Watch is just $70 more. Considering that you get all the extra features that Apple offers, plus it fits right in with your existing iOS ecosystem, that price difference doesn’t seem like much.

A Dying Space

Not only is FIT struggling to stay in the game, but the company may be fighting for a place in an industry that won’t stick around much longer. There is some concern that the wearables space may not become the next big thing. Smartphones are getting more and more versatile with every new generation, and many wonder whether consumers will be able to see the value in shelling out another $200 for a device that essentially does the same thing their phone can do.

`This issue applies to the healthcare space as well. Many considered adding FIT stock to their portfolios after hearing that the firm was making strides into the healthcare industry with employee wellness programs and insurance deals. However, while this idea may be a novel one, putting such an idea into action is a much more difficult concept.

For one, there’s some concern over how accurate the Fitbit activity trackers actually are. Are they accurate enough to base healthcare discounts on? Secondly, companies may eventually be able to drastically reduce the cost of their employee wellness programs by offering an activity tracking smartphone app rather than a separate device.

As smartphone chips become more and more advanced, one can expect that mobiles will be doing virtually everything a dedicated wearable would.

The Bottom Line for FIT Stock

Buying Fitbit stock is not even a risky play, it’s simply a bad one. The company has very little to offer in the way of forward momentum and its lack of future growth potential is worrying. Investors would be better off investing in chipmakers like Qualcomm, Inc. (NASDAQ:QCOM), ARM Holdings Plc (NASDAQ:ARMH) or Intel Corporation (NASDAQ:INTC) that will benefit from a boom in wearables, but won’t be crushed by their demise.

As of this writing, Laura Hoy was long AAPL stock.

Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/fitbit-inc-fit-stock-unfit/.

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