Billion Dollar Unicorns: Fitbit Struggles To Stay Relevant

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According to a research by P&S Market Research, the global wearable fitness tracker market is estimated to grow to $48.2 billion by 2023 driven by the increasing use of fitness tracking apps, demand for continuous health monitoring devices, and increasing disposable income. Billion Dollar Unicorn player Fitbit (NYSE:FIT) has been among the pioneers in the industry. But the company has continued to see its valuation dwindle since it went public in 2015.

Fitbit’s Financials

Fitbit’s recent results weren’t very impressive. Revenues for the quarter fell 17% to $247.9 million. They were marginally ahead of the Street’s forecast of $247.3 million. Losses have continued to grow as well. The company reported a net loss of $0.34 per share compared with $0.27 per share a year ago. On an adjusted basis though, the losses of $0.17 per share were better than the Street’s estimated $0.20 per share. A year ago, Fitbit had recorded losses of $0.15 per share on an adjusted basis.

Among operating metrics, Fitbit sold 2.2 million devices during the quarter, compared with 3 million sold last year.

It forecast revenues of $275-$295 million for the current quarter with an adjusted loss per share of $0.23-$0.27. The market had been forecasting revenues of $310 million and an adjusted per-share loss of 12 cents. Fitbit expects to end the year with net revenues of $1.5 billion.

According to IDC’s recently published results for the last quarter of fiscal 2017, Fitbit is no longer the market leader in the sector. IDC estimates that the company accounted for 14.2% of the market share by volume compared with 18.5% a year ago. During the same period, Apple’s share has gone up from 14.4% to 21%. For the calendar year 2017, Fitbit saw market share drop from 21.5% in 2016 to 13.3% in 2017, while Apple’s share rose from 10.8% to 15.3%.

Fitbit’s Expansion Plan

Fitbit continues to see a decline in the demand of fitness trackers as more people are transitioning to smartwatches that double up as trackers. Sales of its smartwatches nearly doubled for the quarter, and accounted for 30% of the revenues. It expects the overall mix for its revenues to continue to be skewed towards trackers.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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Larry Ramer 1 year ago Contributor's comment

I think the partnership with Google will turn out to be a big key.