Fitbit Desperately Needs Its Smartwatch to Be a Hit

Fitbit (NYSE: FIT) reported second-quarter earnings on Tuesday, and investors cheered the results, sending shares up 15%. The company isn't quite out of the woods yet, but it's making some undeniable signs of progress in its turnaround.

In case it wasn't clear by now, Fitbit desperately needs its forthcoming smartwatch to be a hit. Device unit sales fell 40% year over year to 3.4 million, which led to a painful 40% drop in total revenue to $353.3 million. Fitbit's core U.S. market was hit particularly hard, with revenue falling 55% to $199 million. That top line came in better than expected, which encouraged investors, but perhaps more meaningfully Fitbit confirmed that its smartwatch is "on track for delivery ahead of the holiday season and will drive a strong second half of the year." This all comes amid reports earlier this year that Fitbit has been struggling with smartwatch development. Investors appear optimistic that those challenges are now in the rearview mirror.

The biggest question now is: Can Fitbit's smartwatch successfully challenge Apple's (NASDAQ: AAPL) Apple Watch?

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Source: Fool.com