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Can Fitbit Recover after a Disappointing 2016?

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Aug. 18 2020, Updated 10:32 a.m. ET

Shares of Fitbit fell 12.4% in December 2016

Shares of Fitbit (FIT) fell 12.4% last month to close at $7.32. Shares of Fitbit fell over 75% in 2016, driven by the fall in sales due to low consumer demand and a slowdown in the wearable market. Although Fitbit still leads the wearable market, the overall market grew 3.1% YoY in 3Q16 when the company shipped 23 million units.

According to IDC, Fitbit is estimated to have shipped 5.3 million units with a share of 23% in the wearables device market in 3Q16. Xiaomi came in second place for 3Q16 with shipments of 3.8 million units and a market share of 16.5%. Apple fell to third place as shipments fell 71% YoY to 1.1 million units and a share of 4.9%. Samsung (SSNLF) and Garmin (GRMN) are the other leading players in this segment with shipments of 1 million units and 1.3 million units, respectively.

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In 2Q16, total unit shipments rose 26.1% year-over-year from 17.8 million units to 22.5 million units. IDC, however, expects the worldwide wearables market to grow at a CAGR of 20.3% from 2016 to 2020. Total shipments are projected to rise from 79 million in 2015 to 101.9 million in 2016 and 213.6 million in 2020.

How will the Pebble acquisition help Fitbit?

Recently, Fitbit reported that it had inked a deal to harvest certain Pebble assets as Pebble shuts down operations amid stiff competition in the smartwatch market. Smartwatch shipments fell 51.2% in 3Q16.

However, Fitbit’s move to acquire Pebble assets could cause problems for Apple (AAPL). Pebble and Apple compete in the smartwatch market. While Fitbit has a clear lead in the fitness tracker market, Apple is leading in the smartwatch space. By adding Pebble assets to its portfolio, Fitbit could develop enhanced fitness devices that could give Apple a run for its money in the smartwatch market.

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