In September of this year, I made two outrageous calls. First, I said that bitcoin could very well hit $10,000. A week later, I wrote a bullish article about Fitbit Inc (NYSE:FIT). This despite the fact that at its lowest close, FIT stock lost nearly 33% of market value.
Mathematically speaking, I was right on both counts.
At the current FIT stock price, investors are very modestly profitable. But as you can see from recent headlines, only one of my predictions was substantively accurate. Bitcoin is quite possibly the greatest investment not only of our time, but in all of human history. In contrast, FIT is down 79% since its first day of trading.
To be frank, I wasn’t expecting a gargantuan leap. Still, I anticipated something more than what I’m seeing right now in the FIT stock price. Unfortunately, although Fitbit produced a better-than-expected third quarter earnings result, its revenue haul against the year-ago quarter was dramatically disappointing. With fierce competition from Apple Inc. (NASDAQ:AAPL) and Garmin Ltd. (NASDAQ:GRMN), Fitbit desperately needed to put on a good showing.
It did not put its best foot forward. Moreover, Wall Street made the assumption that Fitbit would have to grow by cutting. That message didn’t work out so well for the FIT stock price earlier this year. Certainly, it’s not something that investors want to hear at this juncture.
Nevertheless, given that so much market value has been taken off the board, is FIT stock worth a second look?
FIT Stock Benefits From Accessibility to All
At great risk of being too stubborn for my own good, I’m still willing to extend a hand to Fitbit. However, I can lose my patience, just like anyone else. What I want to see from FIT is some sign that it can take it to Apple in certain areas.
In my last write-up, I argued that Fitbit was still relevant in its core consumer retail sector. While Apple has pumped out its wearable devices, it of course retains the Apple brand name. In other words, they’re awfully expensive for many consumers. Raise that sentiment twofold for use in athletic activities that could result in serious damage.
While Apple dominates the wearables sphere, we have to keep in mind that it’s not necessarily immune from competitive pressure. Its cheapest Apple Watch starts at $249, and its most expensive sporting models can go for as high as $400. Even a replacement wristband costs $49. That just doesn’t leave many options for consumers with modest means.
The advantage for Fitbit is that its business is streamlined primarily for the retail health and fitness sector. Its cheapest product, the “Zip,” has an MSRP of $60. Should you want something with more features, you have a plethora of options scaled to your fitness commitment. It’s not a binary affair where your two choices are either expensive or very expensive.
For the FIT stock price to move higher, management needs to aggressively push advantages wherever they have them. In America, we have an obesity problem. But truth be told, that problem disproportionately impacts low-income families.
Fitbit needs to market itself as the everyman’s and everywoman’s fitness device. It has the product portfolio to prove it; it just needs to get that message across.
Fitbit Is Streamlined for Fitness Success
Another advantage that Fitbit carries, and one that could materially impact FIT stock, is its growing community. In my opinion, the company’s fitness ecosystem is second to none. With access to digital and human sources of motivation, those who are serious about their health have wonderful tools.
More importantly, even its cheapest devices can access the features being plugged into the FIT network offers. Again, Fitbit devices are much more accessible to the people that really need these products and services.
The shame of it all is that we haven’t heard too much about these developments. A few years ago, quirky Fitbit commercials were all the rage. Now, it seems gun-shy to advertise, even though it’s arguably a stronger company.
Lastly, it’s not all doom and gloom for FIT stock. The Fitbit Ionic shows a lot of promise, and I’m not just talking about its features. This is a premium smartwatch that’s going head-to-head with Apple, and initial consumer reception is very encouraging.
Cautious analysts warn not to exaggerate Ionic’s impact, and I’m not. My argument is that Fitbit has the price and value advantage in entry-level and mid-tier models against Apple, if only for the reason that Apple’s presence there is practically nonexistent. So if Fitbit can compete on the high end too, that’s just another reason why FIT stock can potentially surprise.
As of this writing, Josh Enomoto is long bitcoin.