I believe that Fitbit Inc (NYSE:FIT) stock will rally this year because of its potentially life-saving products and because it can save health insurers so much money. But there are two main steps that FIT should take to ensure that Fitbit stock doubles or triples this year.
First of all, Fitbit should follow in BlackBerry Ltd’s (NYSE:BB) footsteps by licensing its life-saving technology to well-established, major companies. Specifically, just as BlackBerry licensed its highly secure QNX operating system to auto manufacturers for use in driverless cars, FIT should sell its health tracking smartwatches directly to health insurance companies at discounted prices. Even if Fitbit’s margins on such deals are extremely low, or even slightly negative, it should do what it takes to ensure that it gets such transactions done.
Once Fiitbit’s smartwatches get into consumers’ hands via their health insurers, consumers could become addicted to their ecosystem, and Fitbit can find innovative ways to make money from these customers.
For example, FIT could enable other companies to sell ads through the smartwatches and it can sell the data that it compiles on its users.
Fitbit should also emulate BlackBerry by partnering with small firms whose owners are closely connected to health insurers. As I’ve written previously, I believe that BlackBerry’s partnership with Giuliani Partners was a key behind BlackBerry’s success in winning many lucrative government IT security deals in the past few quarters.
The CEO and founder of Giuliani Partners, Rudy Giuliani, was a key backer of President Donald Trump during the 2016 presidential campaign. Similarly, by partnering with companies owned by former high-ranking health insurance executives, FIT can greatly increase its chances of making deals with health insurers, thus improving its results, whether in the short-term or longer term, and boosting Fitbit stock in the process.
Additionally, Fitbit should partner with Samsung. As I’ve said in the past, Fitbit and Samsung seem like a great match. Samsung has indicated that it’s looking to make deals in the “digital health” sector, while it has failed to become a major player in the wearables market.
Fitbit has been losing ground to Apple Inc. (NASDAQ:AAPL) and its Apple Watch, and the sales of Fitbit’s new smartwatch, the Ionic, were disappointing last year, FIT told investors.
I believe that if FIT could inform more people about the device’s superior health monitoring, life saving technology, Ionic would become a tremendous hit, enabling Fitbit stock to leave Apple in the dust and providing a tremendous boost to FIT stock. A large investment by Samsung would allow Fitbit to spend much more money on ads, celebrity endorsements, public relations efforts, etc, allowing more consumers to learn about Ionic’s positive points of differences vis-a-vis the Apple Watch, which I’ve thoroughly outlined in the past.
A sizable investment by Samsung would also enable Fitbit to pay app developers more, boosting the quality and quantity of its smartwatch apps. And FIT could use the money from Samsung to invest more in R&D, potentially leading to more innovations on the health monitoring front.
Finally, a large investment by Samsung would provide Fitbit stock with more cash and boost Fitbit stock, and both of those developments would give FIT greater ability to make highly productive acquisitions.
FIT stock is bound to rise significantly from its current low levels, given the life-saving nature of its products. But taking the steps I’ve described above would ensure that Fitbit’s results will surge tremendously, boosting the stock in the process.
As of this writing, Larry Ramer owned shares of FIT stock and BlackBerry stock.