Fitbit Shares Plunge

Fitbit Shares Plunge

Fitbit have just announced their Q4 results and hence results for the full calendar year that brought us more realistic views of the contributions from Fitbit Versa, Fitbit Ace and Fitbit Charge 3, which together account for 57% of revenues.

However, the shares ‘plunged’ due to Fitbit giving ‘weak’ guidance for the quarter ahead and for the year ahead. Whilst Fitbit expects the topline sales $ to grow modestly between 1% and 8% and they specifically note:

• Q1.2019 Guidance: “We expect …a decline in average selling price.“
• Full 2019 Guidance: “We expect …average selling price to decline,

Revenues in the US and EMEA regions are all in decline.

Highlights

• Making a profit this time around. Yay !
• Active users grew 9%
• 38% repeat customers

Also of note is that 56% of employees in R&D and the company has a total headcount totalling 1,694 employees. Jeez, what are all those people in R&D doing? I’d do the maths but it’s still a lot of people aka 948.64 people.

My Opinion

1. So there are lots of people in R&D churning out relatively unremarkable but increasingly ‘sound’ devices with a limited number of USPs. Where is that going?
   • Q: Was there any mention of new products in the forward looking statements?…A: No. (there might be of course)
2. Prices are going to be lowered and yet that precisely will start to compete more with the newer, cheaper Chinese entrants. Sounds like a plan…just not a very good one.
3. APAC seems to be a good news story but with varying trade tensions between the US and China, who knows what will happen to that market?
4. As a tech stock you may well see share price rises that follow rises in the sector but I can’t see Fitbit performing as well as any tech index unless they are the subject of takeover speculation.

Source: Fitbit.com