Trade Inc: Wearable fitness tech company, Fitbit’s saw its stock plunge by more than 30% after its revenue forecast for the forthcoming holiday shopping period fell significantly short of Wall Street analysts' estimates.
The company posted mixed quarterly earnings that saw it meet expectations on earnings per share of 19 cents but miss on revenues, coming in at $504 million compared with forecasts for $507 million. The company’s CEO, James Park said that his company was still profitable and still growing but not at the pace they had assumed.
One of a slew of technology sector companies that have gone public in recent years, Fitbit has found it challenging to remain relevant in a consumer market with changing appetites.
The bulk of the damage to the stock price was attributed to Fitbit’s forecast for revenues in the all-important 4th quarter which hosts two traditionally buoyant holiday shopping periods. The company said it would generate $725 million to $750 million in the quarter, a large shortfall compared to consensus analysts’ expectations for $985 million.
“Fitbit’s having trouble securing batteries small enough to fit its new Flex 2 wristband and, as a result, it likely won’t be available to buy until December or perhaps later. This is a major disaster and we’re not surprised investors have punished the stock,” said Huang Cho, senior technology researcher at Trade-Inc.
Fitbit’s stock has fallen 69% in 2016 amid increasing competition from rivals like Apple, Xiaomi and Garmin all of whom produce devices that Fitbit’s don’t, often at highly competitive prices.
Trade-Inc reaffirmed its sell rating on the stock advising those with exposure to sell into rallies.

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