Fitbit Shares Flying High After Monster $6.42 Billion IPO, But Doubters Still Abound
Shares of Fitbit, the fitness wearables company, continued to spike on the New York Stock Exchange on Friday, according to The Street, gaining 9.8% in early morning trading to reach $32.98. Following on Thursday’s impressive Market debut, when Fitbit shares shot up from an initial offer price of $20.00 to close at $29.86 – a gain of 48% – Fitbit investors can go into the weekend celebrating a highly successful I.P.O.
Indeed, as The New York Times reports, the share price had gained as much as 50.2% at opening Thursday, reaching as high as $30.40, as the company raised a whopping $732 million for itself and selling shareholders. Fitbit’s market success is even more impressive considering that the initial price had already been raised above its selling range of $17 to $19. The IPO, and Friday’s trading, now leaves Fitbit with a market cap of $6.42 billion, according to The Street.
$FIT opens 52% higher in market debut http://t.co/NVeA2Uo1y3
— Ryan D (@ryandougIas) June 18, 2015
San Francisco based Fitbit provides wearable fitness and activity tracking devices, which – according to The Street– “[combine] connected health and fitness devices with software and services, including an online dashboard and mobile applications, data analytics, motivational and social tools, personalized insights, and virtual coaching through fitness plans and interactive workouts.”
Fitbit, started in California in 2007, certainly has the numbers to suggest that its IPO is well worth the fuss. Despite competition from the likes of Apple – with Apple watch – the company is dominant in the competitive wearables sector, and as Forbes reports, booked profits of $131.8 million on $745.4 million revenues in 2014, and already tripled sales to $336.8 million in its most recent quarter, putting it on track for over a $1 billion revenues for 2015. The future looks bright too, with research firm IDC forecasting the global wearables market to grow 173.3% this year to 72.1 million shipped units shipped, according to Forbes.
As expected, Fitbit CEO and cofounder James Park is bullish about the company’s prospects. As he told Forbes, he expects Fitbit’s focus on financial discipline and its core health and fitness tracking products to give it an edge over competitors like Apple, Xiaomi and Jawbone. He expounds further in an interview with The New York Times.
“We are the clear market leader with 85 percent market share; Fitbit is synonymous with health and fitness tracking, and that gives us a competitive advantage in the marketplace.”
Samuel Gibbs, writing in The Guardian, also predicts a bright future for Fitbit, pointing to growth in the “corporate wellness” market as a crucial factor.
“If it was just down to sales to consumers, which is a small but expanding market, then it may be questionable. But Fitbit has an ace up its sleeve in the burgeoning “corporate wellness” industry that is set to revolutionise the workplace.”
But doubters abound too, not least Tim Mullaney of Market Watch who argues – in his unambiguously titled opinion piece, “Why I Hate The Fitbit IPO (And You Should Too)“ – that, despite the impressive financials, Fitbit and its products are just another passing fad that are not nearly as innovative or important as the hype suggests.
“Fitbitmania! is an extension of the Valley’s recent love of superficial innovations, which can (but often doesn’t) create lasting value. It’s the thinking that had people positing the Apple Watch as a health breakthrough.”
Can Fitbit match the expectations that its successful IPO will bring? Or will the hype outweigh the substance?
For now, the market is bullishly on the side of the Fitbit optimists.
(Photo by Eric Thayer/Getty Images)
