Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Fitbit gives dismal holiday-quarter sales forecast, shares plunge

Published 02/11/2016, 21:08
© Reuters. The ticker symbol for Fitbit is displayed at the post where it is traded  on the floor of the NYSE
AAPL
-
GRMN
-
0593xq
-

(Reuters) - Wearable fitness device maker Fitbit Inc's revenue forecast for the key-holiday shopping quarter fell well short of analysts' estimates, hurt by stiff competition from rival device makers.

Shares of the company, which also reported lower-than-expected quarterly revenue, plummeted more than 30 percent to $8.93 in extended trading on Wednesday.

Fitbit forecast revenue of $725 million to $750 million for the key holiday-shopping quarter, well below analysts' estimates of $985.1 million, according to Thomson Reuters I/B/E/S.

That implies revenue growth of 5.4 percent at the top end of the forecast. Analysts were expecting growth of 38.4 percent, picking up from the latest third-quarter's 23.1 percent rise, which is the smallest increase since the company went public in June 2015.

"We continue to grow and are profitable, however not at the pace previously expected," Chief Executive James Park said.

Fitbit is the leader, according to research firm IDC, in the market for wearable devices such as wristbands that track the wearer's calories, sleeping patterns and heart rate.

But, the San Francisco-based company is facing increased competition from devices made by rivals such as Xiaomi, Garmin Ltd (NASDAQ:GRMN), Samsung Electronics (LON:0593xq) and Apple Inc (NASDAQ:AAPL).

Fitbit's products have created excitement on Wall Street, but its stock has also attracted short sellers who are sceptical about the potential size of its emerging product category.

The short interest in the stock has steadily climbed to touch a record high of 26.6 percent of outstanding shares as of mid-October, according to Thomson Reuters data.

Fitbit, which launched two new fitness wristbands Charge 2 and Flex 2 in late August, said it sold 5.3 million devices in the quarter ended Sept. 30, up from 4.8 million a year earlier.

Analysts on average had expected shipments of 5 million devices, according to research firm FactSet StreetAccount.

Still, Fitbit's revenue of $503.8 million in the third quarter missed analysts estimates of $506.9 million.

Operating expenses jumped 52.4 percent to $196.2 million, largely due to an increase in research and development costs.

Net income fell to $26.1 million, or 11 cents per share, from $45.8 million, or 19 cents per share. Excluding items, it earned 19 cents per share, in line with analysts' expectations.

© Reuters. The ticker symbol for Fitbit is displayed at the post where it is traded  on the floor of the NYSE

Fitbit's shares have fallen about 13.5 percent since Sept. 7 when Apple launched its latest smartwatch.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.