FitBit Falls Steps Behind on Secondary Offering

Shares of Fitbit Inc., the maker of wearable fitness-tracking devices, continued a precipitous decline Friday, even though the company sold fewer shares than initially planned in a secondary offering.

The smaller offering wasn’t enough to stanch the bleeding in FitBit’s stock Friday. Its shares are on track to end the week down 28%.

The company priced its secondary offering at $29 per share, roughly 8% below its closing price Thursday and 29% below its closing price on Nov. 2, the day before it announced the stock sale. The company also limited the number of shares it sold to the public to three million from an initially-planned sale of seven million shares.

Still, many of FitBit’s executives and venture-capital investors participated in the stock sale, which Sterne Agee CRT analyst Rob Cihra said gave the stock and the offering “negative investor optics.”

FitBit’s CEO and co-founder James Park sold 2.2 million shares. Early investor Jonathan Callaghan of True Ventures sold 3.8 million shares. Another early investor, Foundry Group, sold 4.2 million shares. Even after these sales, all three investors and the other sellers still hold sizable stakes.

All told, existing stockholders sold 14 million shares after Morgan Stanley, which handled the offering, freed their stock several weeks early from lock-up agreements that had prevented them from selling. Including the shares sold by the company, 17 million shares changed hands.

Mr. Cihra reduced his price target on the stock to $35 from $45. While Mr. Cihra said he expects FitBit to beat expectations for its fourth-quarter results, he argued that the company needs to prove that it can create a sustainable platform for growth.

Can I swim or shower with my tracker?

All Fitbit trackers are water-resistant, which means they are rain-proof and splash-proof and can stand up to even the sweatiest workout.

Do not swim with your tracker. We also don't recommend showering with your tracker; though the water won't hurt the device, wearing it 24/7 does not give your skin a chance to breathe. Whenever you get your tracker wet, dry it thoroughly before putting it back on.

The Fitbit Surge™ is water resistant to 5 ATM, or 50 meters, and the Fitbit Charge HR™ is water resistant to 1 ATM, or 10 meters. This means the trackers can be submerged and will still work when removed from the water. However, this does not mean the trackers can withstand the force associated with swimming strokes, so as mentioned previously we don't recommend swimming with the trackers.

Fitbit bears bet heavily against stock ahead of earnings

Nov 1, 2016

Bearish bets on Fitbit Inc.’s stock have soared to record levels, as many investors prepare for the worst when the fitness band maker reveals third-quarter results after Wednesday’s closing bell.

“Our estimate of current short interest as it stands [on Monday] is now $905 million in exposure, an all-time high for Fitbit,” Matthew Unterman, director at financial analytics firm S3 Partners, wrote in a note to clients. “Measuring short interest as a percentage of float, our analysis is estimating as much as 50% of shares are now being borrowed by short sellers.”

As a result of the jump in bearish bets, the cost to borrow shares to short them have increased fivefold in the last month, to a current annualized rate of 5% of the stock’s value from a 1% rate at the beginning of October, Unterman said.

Investors may have reason to fear the worst.

Fitbit has reported quarterly results five times since the fitness band maker went public on June 18, 2015, and has beat earnings and revenue expectations each time. But although the stock shot up 13% on Aug. 3, the day after the latest quarterly report, the stock had tumbled by an average of about 15% the day after the four reports before that.

Fitbit Warns of Revenue and Profit Misses, Will Cut Jobs

Fitness-tracker maker faces competition from growing number of smartwatch makers

Jan. 30, 2017

Fitbit Inc. braced investors for a sharp miss on its fourth-quarter revenue and said it would cut 6% of its workforce, signs that the wearables market continues to slow.

The San Francisco-based maker of fitness trackers warned it will post a loss for the quarter and slashed its revenue forecast to $572 million to $580 million, after having predicted in November that revenue would range from $725 million to $750 million. Analysts polled by Thomson Reuters were expecting $736.4 million.

Shares dropped 13% to $6.28 during morning trading.

Fitbit has faced increasing competition from a growing number of makers of smartwatches, including Apple Inc. Market researcher IDC told The Wall Street Journal in November that shipments of smartwatches fell 52% in the second quarter. After going public in mid-2015 at $20 a share, the stock quickly ramped up in value to the high $40s but has dropped off sharply since.

Experts say fitness trackers have struggled because they are viewed as an accessory instead of a must-have device. About 30% of people in the U.S., U.K. and Australia who had ever worn a fitness tracker no longer use the device, according to a survey this summer by market-research firm Gartner Inc.

Chief Executive James Park said Fitbit experienced weaker-than-expected holiday demand in its most mature markets, but saw growth in regions like Europe, the Middle East and Africa, where sales grew 58%.

The company also said that it would be cutting about 6% of its workforce, or 110 employees, to increase efficiency, and it expects to book a $4 million charge related to restructuring in the first quarter.

Over all for the quarter, the company expects to report an adjusted loss of 51 cents to 56 cents instead of the 14 cent to 18 cent profit it had projected earlier. Analysts were expecting a profit of 17 cents. In the year-ago quarter, the company posted adjusted earnings of 35 cents per share.

Fitbit earnings to reveal an abysmal holiday quarter

Feb 22, 2017

Fitbit Inc. is expected to swing to a loss when it reports fourth-quarter earnings after the market closes Wednesday, as bleeding holiday sales plunge below the company’s initial forecast.

Last month, Fitbit warned that it only sold 6.5 million devices for the fourth quarter, which would amount to revenue in the range of $572 million to $580 million, compared with the company’s previous guidance range of $725 million to $750 million. It also said at the time that it would miss its earnings guidance, and lowered its non-GAAP earnings-per-share estimate to a range of a 51-cent loss to a 56-cent loss, from a profit of 14 cents to 18 cents previously.

The profit warning was pinned on weaker-than-expected holiday demand, even as the company released a new suite of fashionable fitness bands just ahead of the busy shopping season. The guidance prompted a handful of analysts to downgrade the stock and lower their estimates.

“Just like GoPro, Fitbit remains one to be assiduously avoided in 2017 as both have further to fall leaving them open for acquisition,” said Richard Windsor, an analyst at Edison Investment Research.


Here’s what to expect:

Earnings:

Sell-side analysts surveyed by FactSet expect Fitbit to report a loss of 54 cents a share, compared with a profit of 35 cents in the year-earlier period. Contributors to Estimize expect Fitbit to perform slightly better, with a projected 39-cent loss. In the past few quarters, Fitbit has come in slightly shy of the Estimize consensus estimate but ahead of the FactSet one.

Revenue:

The company is expected to report revenue of $576 million, compared with $712 million in the year-earlier period, according to the FactSet consensus estimate. Estimize is forecasting Fitbit sales of $591 million. Fitbit marginally missed both revenue numbers last quarter, but it topped the FactSet consensus estimate in every other quarter since its 2015 IPO.