Could Fitbit’s Reign Be Coming to an End?

Couple exercisingAfter a very successful initial public offering last year, the leading manufacturer of fitness trackers, Fitbit, experienced a surprising 44% plunge in the value of its stock, according to the Motley Fool.

During the recent annual Consumer Electronics Show (CES), Fitbit unveiled their new smartwatch, called Blaze. However, the product was met with skepticism.

As of yet, the only smartwatches that have really seen success are from the tech companies Apple and Pebble.

To make matters worse for Fitbit, a good number of other companies used CES to showcase their own new fitness bracelet products. The conference then closed out with the accuracy of Fitbit’s PurePulse proprietary heart tracking technology coming under fire from a lawsuit.

The fitness company experienced all of this turmoil in just the first week of trading for 2016.

The prime broker and investment bank RBC Capital Markets acted by lowering its price target of Fitbit from $33 down to $28.

In an attempt to help the fitness company, Citibank jumped in on the action by initiating coverage with a $35 price target. However, this did little to restore faith in the stock.

Fitbit is now trading at a value of $20 per share, a substantial decrease from the $50 value they were enjoying during June’s IPO.

Apple is now heating up the competition by implementing fitness as a major component of their smart watch, leading to a decrease in Fitbit’s gross margins. It’s expected that more companies will be jumping on fitness tracking technology.

“On February 11th, additional shares will be available due to the expiration of the FitBit lock-up date. While additional shares may help liquidity, such shares often increase price pressure on a stock,” said Scott Daspin, Director, Prime Broker Sales at Triad Securities, which prepares “The New Issue Service,” a consensus report for IPOS and Secondaries.

It would seem that this drop in their stock was not enough to break Fitbit’s confidence, after recently announcing a new activity tracker called the Alta. Fortune.com reports that the device is not only able to count steps but can track the wearer’s sleeping patterns as well.

They have also taken a note from other similar devices, such as the Apple Watch and Jawbone’s UP line, with an alert system that prompts the wearer to get up and walk around every hour.

This “Reminders to Move” feature was the number one requested add-on by Fitbit customers.

In order to compete in the overall smart watch market, the Alta is also able to display texts, calls, and notifications from the connected smartphone.

Along with Blaze, the Alta will be released in March of this year, at a starting price of $129.95.

Author: GWOB

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