Fitbit Shares Crash In After Market Trading

The precise quote is “Fitbit Shares TUMBLE” (Source: thestreet.com). Let’s have a look why.

Stock markets can be confusing to the uniniated. Fitbit’s newly released Q4 revenues to Christmas 2017 (Source: fitbit.com) were only slightly down on the same period the previous year. Indeed the same figures show a massively reduced loss (that’s generally good ish).

So here’s what happened in New York…

Looks bad.

I’m assuming that the Fitbit earnings were released after the market closed and that the grey ‘crash’ line is from the after-hours trading.

So the >10% ‘crash’, if you look closely was a reversal of the 5% gain in the day from the previous day’s close, probably as some computer or other took an unwise punt 🙁 (err, I mean ‘investment’ call), and yes of course it ended lower than the previous day’s close…about -5%

Putting it into perspective let’s look at the ‘crash’ in relation to the whole year of tumult that Fitbit has gone through and, as you can see, the story is ‘quite a bit less interesting‘.

It looks like lots of positive feelings leading up to Christmas and then the reality of the situation on the retail shop floors gradually being realised. I’m not sure what part the recent larger market movements played, providing the backdrop from a growing US economy but tinged with inflationary fears and wider interest rate fears.

Ignoring market moves, the main reason why individual shares fall is because the view of the future changes.

In their Earnings statement, Fitbit say “We delivered on our full year guidance” and yet others quote not living up to Q4 expectations (Source: techcrunch).

Markets tend to react badly when companies don’t live up to their own publicly stated goals, reflecting badly on the management+strategy and, you could argue, the market might take from that that the management+strategy may well not be up to the job of coping with the market as it unfurls in the future.

Fitbit are making (more) moves into the corporate world with their United Healthcare tie-up and they have the first set of quarterly earnings that include the Fitbit Ionic.

Fitbit says:

• Q4: Sold 5.4 million wearable devices. Average selling price increased 20% to $102 per device driven by adding Fitbit Ionic^TM, our smartwatch, to device mix.
• Q4: New devices Fitbit Ionic^TM, Alta HR^TM and Fitbit Aria 2^TM and accessory Fitbit Flyer, represented 36% of revenue.
• Q4: Sold 5.4 million wearable devices. Average selling price increased 20% to $102 per device driven by adding Fitbit Ionic^TM, our smartwatch, to device mix.
• Q1. 2018: We expect limited revenue from new product introduction. With consumer demand shifting towards smartwatches, we expect revenue to decline approximately (20%) to (15%) year over year and to be in a range of $240 million to $255 million.
• 2018: We expect our device mix to continue to shift towards smartwatches over the course of the year. We expect to grow Fitbit Health Solutions and increase premium subscribers, but this growth will be relatively immaterial to wearable device revenue. We extrapolated the demand trend forecasted in the first quarter 2018 for the full year and expect revenue to be approximately $1.5 billion.

So that means that sales will fall slightly this year but the Health Solutions and the Ionic might hold things up a bit (hmmm).

Also this pretty much says that there is no imminent new Fitbit watch. Whether or not that includes the Ionic adidas edition is another matter (edit: Fitbit Ionic adidas edition announced). Look out for a Charge 3 and/or Blaze 2 after the summer and before Christmas.

 

▷ Fitbit Ionic Review – Detailed | Apple Watch Competitor

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