![]() ![]() The Q1 2019 sales figure a 32% year on year rise for the same period. In the first quarter of 2019, it sold 2.9 million devices. That is definitely good news for Fitbit, which managed to record sales of 13.9 million devices last year. The number of units sold per year could touch 279 million. Next five years and hence, it is worthwhile to speculate on Fitbit’s situationĪs per research from IDC, a tech researcher, wearable tech is going to be a much bigger market in the next five years. Penny Stocks & The Wearable Tech Industryīelieve that the wearable tech industry will grow much more strongly in the In order to generate growth, the company has made a concerted effort to move into other products in order to end the dependence on device sales. Needless to say, despite generating a bit of growth, FIT stock has continued to fall. Specifically, it was cited that just because it was popular didn’t mean it was a good penny stock to buy. We outlined this company in our June Report: 10 Most Popular Penny Stocks on Robinhood. Although the device has proven to be popular, the company has not fared well at all. Among those, Fitbit Inc ( FIT Stock Report) has emerged as one of the most interesting. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.Wearable tech has been one of the biggest innovations in consumer-facing technology over the past decade. If Ionic fails to restart growth, I'm not sure what will.ġ0 stocks we like better than FitbitWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. But Ionic will need to be a success for that to happen, and I'm not convinced the odds are in Fitbit's favor. If it succeeds, the stock could be in for quite the rally. If you're buying Fitbit stock today, you're betting that the company can return to growth. If we learned anything from Microsoft's failure with Windows Phone, successfully launching a new platform in the shadow of already mature platforms is next to impossible. Fitbit will need to convince developers to support its smartwatch. A 4-day-plus battery life and robust fitness tracking features will appeal to many current Fitbit users, but a lack of apps will make it a tough sell to those also considering an Apple Watch. But the assortment will pale in comparison to the more mature Apple and Android ecosystems. Pandora and Starbucks apps will be there, and Fitbit's own mobile payment system will be rolling out over the coming months. Fitbit has opted for its own operating system, meaning that the number of apps available on the Ionic at launch will be meager. Fitbit is launching other new products as well, including the Fitbit Flyer wireless headphones, but all eyes will be on the Ionic when it launches in a few weeks.įitbit's $300 smartwatch will go head-to-head with the Apple Watch, as well as Android Wear devices from a wide variety of competitors. Ionic, Fitbit's first full-featured smartwatch, is at the center of the turnaround strategy. There is no value case for Fitbit stock if the company never recovers, though. And if revenue moves higher in 2018 and beyond, even meager margins could be enough to send the stock soaring. But even a 5% operating margin on $1.7 billion of sales would produce net income of about $55 million, assuming a 35% tax rate. Selling hardware is a tough business, so I wouldn't expect the double-digit operating margins of the past to return. With full-year revenue expected between $1.55 billion and $1.7 billion, Fitbit stock is trading for less than half of sales after backing out its cash. Backing it out, the market is valuing Fitbit's business at just $784 million. This cash represents about 46% of Fitbit's $1.46 billion market capitalization. At the end of the latest quarter, Fitbit had $676 million of cash, cash equivalents, and marketable securities, and no debt. If you assume that sales will eventually recover, driven by Ionic and other new products, a value argument can be made. But sales will need to rebound for the company to stop burning cash. Fitbit has been cutting costs, even laying off employees earlier this year. ![]() Over the past 12 months, the company has posted a GAAP net loss of $238 million on about $1.73 billion of sales. Plunging sales over the past few quarters have rendered Fitbit an unprofitable enterprise. Fitbit's turnaround hinges on a successful entry into the smartwatch market, and Ionic becoming a best-seller looks like a long shot to me. On the flip side, Ionic will face an uphill battle when it launches later this year. ![]() That's the main reason to consider investing in the battered shares. Fitbit stock looks cheap, assuming the company eventually pulls itself out of the gutter. ![]()
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