Analysts polled by Thomson Reuters estimated earnings of $0.03 per share on revenues of $443.24 million. Analysts anticipate that the company will post on average $1.13 EPS for the current year.
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Fitbit’s operating costs almost tripled to $215 million in the first quarter ended April 2, largely due to spending on marketing the $200 Blaze smartwatch and the Alta wristband, the company’s first global launches. However, its earnings per share dropped 63 percent year-over-year from 27 cents in Q1 2015.
“The fact that we introduced the new Blaze and Alta in the last month of the quarter and they drove nearly 50 percent of our revenue is pretty remarkable”, Fitbit chief financial officer Bill Zerella noted on the earnings call.
Fitbit sold 4.8 million devices during the quarter, driven by the new Blaze and Alta trackers, which accounted for 47% of total revenue. The company also detailed a weak outlook for the second quarter.
Fitbit Inc (NYSE:FIT) and Tmall.com, China’s largest third-party platform for brands and retailers, owned by Alibaba Group (BABA), on April 28, 2016 announced that they have signed a memorandum of understanding (MoU) to significantly expand Fitbit’s reach in China. That 31% growth figure looks especially low in light of the recent releases of the Fitbit Blaze and Fitbit Alta, both of which were selling well through the end of March.
FitBit CEO, James Park, claimed their product is more user-friendly than Apple Watch. Analysts now estimate earnings of $1.13 per share on revenues of $2.46 billion. In the other hand, Apple started out doing a bit of everything in just one device, such as showing notifications, tracking fitness statistics and making phone calls, Park said to the New York Times.
“With the release of the Fitbit Blaze, its first smartwatch, and the Fitbit Alta, its revamped fitness band, Fitbit’s expanded product portfolio now straddles the two segments, raising questions around the potential for cannibalisation and whether Fitbit can, or should, compete with the likes of the Apple Watch or the Samsung Gear S2”.
Stock Reaction: Shares of Fitbit have gained 14% in the past three months, compared with the S&P 500’s gain of 10%. After its IPO at $20 a share last June, shares took off, soaring northwards of $50 … only to come plunging back to earth again, falling to lows below $12 per share. Fitbit stands to benefit from a projected surge in wearable-device shipments over the next few years.
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As of this writing, John Divine was long FIT stock.
