Fitbit is not having a good day, with the stock crashing more than 11 percent after reporting its first-quarter results.
Here’s the rub: its guidance for the second quarter came in light. Very light. Industry watchers were expecting the company to report earnings around 26 cents per share, while the company put its outlook at earnings between 8 cents per share and 11 cents per share. That’s a pretty big miss, and another indicator that the company will be facing some challenges in the wearable market.
Fitbit is facing a ton of increasing competition, not only from Apple with the Apple Watch, but from international manufacturers like Xiaomi and the usual competition from Jawbone. Fitbit’s usual strategy has been to go after the fitness-tracking market with a portfolio of devices, but recently it’s somewhat diverged from that with the launch of a smartwatch. Naturally, given Fitbit’s previous success, a shift in strategy may not be very welcome to investors looking for continued growth in the company — and a strong return.
All this has forced Fitbit to find more unique ways to prove to consumers that it is the best option when it comes to fitness tracking. One recent example was an integration with the Amazon Echo, in which users can ask with their voice how they are performing through their Fitbit devices. It’s novel use cases like these that might propel the company above the competition, but so far we haven’t seen any kind of dramatic success on that front.
This isn’t the first time the stock has been crushed as indicators point to a more challenging environment for the fitness-tracking device company. Fitbit went after the smartwatch market, and investors promptly punished the company with another 10 percent drop. Last quarter, the company once again missed expectations on its outlook — sending the stock down dramatically again.
Here’s the quick rundown of the report:
- Devices: 4.8 million units sold
- Earnings: 10 cents per share, against analyst estimates of 3 cents per share
- Revenue: $505.4 million, against analyst estimates of $443 million
Though, to be sure, the company beat its own expectations of $420 million to $440 million in revenue for the first quarter. So whether or not this signals another lowball for the company remains to be seen, but in sum, it’s a big whiff for investors looking for some indication that the company is coming from a point of strength when it comes to the wearable market.
In the past six months, Fitbit shares are down more than 50 percent.