Fitbit May Not Be Doomed, but the Time to Give Up on the Stock Is Near
The second quarter of 2019 left a lot to be desired at Fitbit (NYSE: FIT). When an industry is in growth mode, it's rare that a zero-sum game (in which one player's gain is the other's equally matched loss) is the case. But in the world of wearables, it's almost starting to look that way -- at least as far as the battle between Fitbit and Apple (NASDAQ: AAPL) is concerned.
According to tech researcher IDC, wearable devices (which include smartwatches, wristbands, and smart-assistant-enabled headphones) are expected to reach 279 million units shipped every year by 2023, up from an anticipated 199 million units shipped in 2019. Representing nearly 9% yearly average growth, that's hardly peanuts and should be more than enough new business to go around.
Except it isn't, not for Fitbit anyway. After the first quarter of 2019, things admittedly started to look up. Quarterly device shipments went up 32% to 2.9 million, and although the average device was far cheaper than the year prior, it was good for a 10% surge in revenue. Within the total, health solutions service revenue -- a key component of the business if Fitbit is ever to be a viable long-term company -- went up 70% year over year to about $30.5 million. Management said full-year health solutions business would exceed $100 million. In all, it was an imperfect quarter that nevertheless showed promising signs.
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