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Fitbit Plunges to 52-Week Low: Three Reasons to Stay Away
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Shares of Fitbit, Inc. hit a 52-week low of $5.42 on Mar 22.
The stock declined 8.7% since it posted fourth quarter 2016 loss on Feb 22 against the Zacks Electronics - Measuring Instruments industry’s decline of 3.6%.
Notably, the company’s shares have lost a mammoth 81.6% since Jun 18, 2016, the day on which the company began trading on the New York stock exchange.
Fitbit’s growth has been slowing down with smartwatches outshining the fitness wearable category, influx of new wearables, lack of upgrades among existing users and lackluster growth in the Asia Pacific region.
Despite the broad range of devices Fitbit provides at different price points, it faces competition at both the high- and low-end products. At the high end, there is Apple’s (AAPL - Free Report) multi-functional Apple Watch, which renders Fitbit devices useless. There are other big manufacturers who are developing connected devices on Alphabet (GOOGL - Free Report) owned Google's Android operating system. At the lower end, there are fitness-tracking devices from competitors like Jawbone and Garmin (GRMN - Free Report) , which also give it strong competition.
With Fitbit bringing in counter strategies through the roll out new products, buying smaller companies and increasing marketing spend, its operating expenses as a percentage of revenues have increased to 53.1% in the fourth quarter of 2016 from 34% in the year-ago quarter. Increasing expenses coupled with slower revenue growth forced the company to post a net adjusted loss of 63 cents per share in the fourth quarter of 2016.
Fitbit, Inc. Net Income (TTM)
Recent Executive Shakeup Fails to Infuse Hope
The recent decline appears to be prompted by its announcement of an executive shakeup a few days back. With chief business officer, Woody Scal and executive vice president, Interactive, Tim Roberts, stepping down, it appears that investors are not much hopeful about the company’s comeback.
Concurrent with the announcement, Fitbit said that it will realign under two main businesses - Consumer Health & Fitness and Enterprise Health. The Consumer Health & Fitness business will focus on delivering more efficient health and fitness devices, diversifying into the smartwatch category and offering premium software and services.
Enterprise Health, on the other hand, will enhance focus on developing and strengthening relationships with employees, insurance companies, health systems and healthcare partners. Only time will tell if these moves really work and give Fitbit a chance to make a comeback.
Downward Estimate Revisions
For the full year, five estimates have moved down in the past 60 days, compared with no upward revisions. This has caused the consensus estimate to trend lower, going from earnings of 29 cents a share 60 days ago to its current level of a loss of 62 cents.
Also, for the current quarter, Fitbit has seen two downward estimate revisions versus no upward revision, which dragged the consensus estimate down to a loss of 25 cents a share from a loss of 5 cents over the past 60 days.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long-time horizon to wait.
Currently, Fitbit is a Zacks Rank #4 (Sell) stock.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Fitbit Plunges to 52-Week Low: Three Reasons to Stay Away
Shares of Fitbit, Inc. hit a 52-week low of $5.42 on Mar 22.
The stock declined 8.7% since it posted fourth quarter 2016 loss on Feb 22 against the Zacks Electronics - Measuring Instruments industry’s decline of 3.6%.
Notably, the company’s shares have lost a mammoth 81.6% since Jun 18, 2016, the day on which the company began trading on the New York stock exchange.
Fitbit, Inc. Net Income (TTM) | Fitbit, Inc. Quote
Apple Running Fitbit into the Ground
Fitbit’s growth has been slowing down with smartwatches outshining the fitness wearable category, influx of new wearables, lack of upgrades among existing users and lackluster growth in the Asia Pacific region.
Despite the broad range of devices Fitbit provides at different price points, it faces competition at both the high- and low-end products. At the high end, there is Apple’s (AAPL - Free Report) multi-functional Apple Watch, which renders Fitbit devices useless. There are other big manufacturers who are developing connected devices on Alphabet (GOOGL - Free Report) owned Google's Android operating system. At the lower end, there are fitness-tracking devices from competitors like Jawbone and Garmin (GRMN - Free Report) , which also give it strong competition.
With Fitbit bringing in counter strategies through the roll out new products, buying smaller companies and increasing marketing spend, its operating expenses as a percentage of revenues have increased to 53.1% in the fourth quarter of 2016 from 34% in the year-ago quarter. Increasing expenses coupled with slower revenue growth forced the company to post a net adjusted loss of 63 cents per share in the fourth quarter of 2016.
Fitbit, Inc. Net Income (TTM)
Recent Executive Shakeup Fails to Infuse Hope
The recent decline appears to be prompted by its announcement of an executive shakeup a few days back. With chief business officer, Woody Scal and executive vice president, Interactive, Tim Roberts, stepping down, it appears that investors are not much hopeful about the company’s comeback.
Concurrent with the announcement, Fitbit said that it will realign under two main businesses - Consumer Health & Fitness and Enterprise Health. The Consumer Health & Fitness business will focus on delivering more efficient health and fitness devices, diversifying into the smartwatch category and offering premium software and services.
Enterprise Health, on the other hand, will enhance focus on developing and strengthening relationships with employees, insurance companies, health systems and healthcare partners. Only time will tell if these moves really work and give Fitbit a chance to make a comeback.
Downward Estimate Revisions
For the full year, five estimates have moved down in the past 60 days, compared with no upward revisions. This has caused the consensus estimate to trend lower, going from earnings of 29 cents a share 60 days ago to its current level of a loss of 62 cents.
Also, for the current quarter, Fitbit has seen two downward estimate revisions versus no upward revision, which dragged the consensus estimate down to a loss of 25 cents a share from a loss of 5 cents over the past 60 days.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long-time horizon to wait.
Currently, Fitbit is a Zacks Rank #4 (Sell) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>