Fitbit’s lowest-ever stock price: Cause for alarm?

This Fitbit is broken (picture credit: Liralen Li on Flickr)

On paper, it would be one of the greatest wearables success stories – clearly recognized as the market leader in terms of sales (and to an extent, for its products too), two new product launches under its belt this year already and a maturing market for smart wristbands.

Yet Fitbit’s stock keeps on tanking. From a glorious peak of $51.64 per share in July, just weeks after the company’s IPO last June, Fitbit stock is now trading at under $14 per share, its lowest ever.

Fitbit's growing line-up

Fitbit’s growing line-up (image: PR)

The company boasts an impressive, competitive range of wearables – from the budget-end belt-clippable Zip (long established in the market, and relatively robust) through to the Aria, which launched last week, placing a greater focus on style over silicon. Overall, it has a range of eight different wristbands, each differentiated by price and function. Oh, and a pair of smart scales.

However, its shares have now twice suffered heavy losses in a single day – after the announcement of Fitbit’s first quarterly results as a publicly listed company (despite the report being positive, as we commented at the time). Then lightning struck again at the start of the year, when Fitbit launched its colorful sub-smartwatch, the Blaze. Incidentally, the Blaze seems to be the first of a new line of bands from Fitbit that feature less technology and concentrate more on style – the Aria wristband followed suit.

Class action
There’s even a class action lawsuit that has been filed against Fitbit, simply because the stock has tanked: “Faruqi & Faruqi, LLP Encourages Investors Who Suffered Losses In Excess Of $100,000 Investing In Fitbit, Inc. To Contact The Firm”.

Although Fitbit’s stock price continues to tumble, it appears that some savvy investors are not deterred, and even snapping up the stock like it’s in a fire sale. For months, Fitbit’s investor relations pages on its website have been full of amended statements of ownership, as large chunks of stock change hands.

According to SEC filings, Salesforce.com CEO Marc Benioff holds more than five million Fitbit shares or around five percent of the company, and the Vanguard Group, an investment fund, owns 9 per cent.

At this new low price, Fitbit stock is down to a price:equity ratio of around 12, which is exceptionally low for a start-up. For example, Salesforce’s own PE is 59, while Walmart has a PE of around 15.8. Based on this alone, there’s still hope for Fitbit.

/WTW

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