Fitbit Inc: a stock 'fit' for investing?
Fitbit Inc is an established performer in the emerging market for wearable technology. But does its imminent IPO represent an opportunity for investors?
It seems no matter what you want to do these days you are presented with an app that can aid you. I read a study recently that claimed the ‘average’ person is no more than four feet from their phone for 20 hours a day. It seems that smartphones and the apps that run on them are integral to modern living.
You would think the array of apps and phones out there would be enough for people but it seems not. The next step to get closer to our beloved technology is the introduction of devices you can wear.
Fitbit is one such company that hopes to steal the march on the mighty Apple and its watch. They are hitting the popular fitness and well-being market with a number of stylised wearable devices that wirelessly connect to your phone via the Fitbit app.
The app provides a staggering array of things you can track and record about yourself. From tracking how many steps you have taken in the day to recording your sleep patterns. The ability to plan routines and measure your ‘success’ is seemingly limitless.
Fitbit is clearly targeting the tech-savvy millennial market. As people are now literally ‘synced’ with their phones the ability to record your own data is both logical and useful. With a reasonable price tag of around $99 it’s clear the business model is to hit the younger consumers early and to keep them interested with future upscale luxury alternatives.
With Apple on track to be the first company to have a market cap of $1 trillion pending watch sales, it’s not hard to see why investors may be very interested in an established Fitbit brand already delivering good sales in wearable technology, and now just about to float on the stock exchange.
Let’s look at the figures:
|•||Sales rose to $745.2 million in 2014 from $14.5 million in 2011|
|•||$131.8 million profit in 2014 from a loss of $4.3 million in 2011|
|•||Sales to date: 20.8 million units|
|•||$66 million raised in four rounds of venture capitalist funding|
Thomson Reuters indicated an expectation that the IPO would draw over $100 million on account of the company’s strong performance. The company will trade under the symbol ‘FIT’ on the New York Stock Exchange (NYSE).
Like most successful companies timing is everything and competition is not always a bad thing, especially when it is Apple. With such a buzz around what will be the next big thing the Apple watch is almost doing Fitbit’s marketing for them.
With other well-known brands like Jawbone, Garmin and Inter in this space outside of social media, this is a very interesting area for investors. I have no doubt that the stock will attract a lot of attention in the days after the IPO.
Chief Market Strategist
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