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Why Did Fitbit Stock Fall More Than 75% in 2016?

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Fitbit stock: The 2016 fall

Fitbit (FIT) stock fell 12.4% in December 2016 and more than 75.0% in 2016. What caused this significant fall? Sales fell due to low consumer demand and a slowdown in the wearables market. Fitbit’s market capitalization has fallen from $7.0 billion at the start of 2016 to approximately $1.8 billion currently.

FIT stock has also been on a downward spiral due to lower margins and increasing competition. We’ll take a look at all these factors in this series.

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How did Fitbit perform in 3Q16?

In 3Q16, Fitbit reported revenue of $504.0 million, a rise of 23.0% YoY (year-over-year). Non-GAAP (generally accepted accounting principles) EPS (earnings per share) was $0.19 in 3Q16. Analysts estimated that the company would post revenue of $506.9 million for the quarter, which ended in September 2016. Analysts’ low estimate was $489.7 million, and their high estimate was $542.0 million. Analysts expected FIT’s EPS to be $0.19, with a high estimate of $0.23 and a low estimate of $0.18.

As consumers all over the world are focusing on improving their health and well-being, Fitbit will try to penetrate this massive market over the next few quarters to drive revenue growth. It’s looking to accelerate the network effect of its user community.

Next, let’s see how a slower wearables market has affected Fitbit.

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