Fitbit stock (FIT) has declined significantly over the last few years. The stock touched an all-time high of $47.51 in August 2015 and has since fallen to $4.50. Fitbit stock declined 11% last month and is down 15.9% in October 2018. The stock has lost 21% in 2018. Fitbit was once the market leader in the global wearable market. However, it has since lost the position to Apple. A fall in product sales has impacted profitability as well.
The company has also lost market share to China’s (FXI) Xiaomi and Huawei. Niche players such as Garmin (GRMN) and Fossil (FOSL) have also weighed on product sales. Fitbit has tried to win back market share and gain traction in wearables by introducing new products. The company is looking at other ways to increase revenues. Last month, it launched Fitbit Care, a new health coaching platform.
Revenue and earnings set to decelerate in 2018
Fitbit’s revenue is estimated to fall by 7.8% to $1.5 billion in 2018 with non-GAAP EPS (earnings per share) expected to decline 31% to -$0.34. With revenue growth of 2.6% for Fitbit in 2019, the earnings are expected to improve by 26.5%. The company’s EPS is expected to rise at a CAGR of 13% over the next five years. Fitbit will have to grow revenue at a faster pace than the overall industry and improve profitability to make it an attractive buy.
Out of 15 analysts covering Fitbit, three have recommended a “buy” for the stock, ten have recommended a “hold,” and two have recommended a “sell.” Their average 12-month target estimate for the stock is $6.39, indicating that Fitbit is trading at a discount of 42% to analysts’ target estimates.