Can Fitbit grow market share in the wearables space?
Fitbit (FIT) seems to be focusing more on the smartwatch segment with the launch of the Versa and Fitbit Ace for kids. Almost 49% of Fitbit’s total sales in the third quarter were driven by smartwatches.
However, the new devices have not led to revenue growth. They have merely stalled a decline in sales. According to market research firm Gartner, the wearable device is set to grow by 26% this year driven by smartwatch sales. The total smartwatch shipments are expected to rise from 53 million in 2018 to 115 million in 2022.
This robust growth provides a chance for Fitbit to gain traction in the wearable market over the next few years. However, it competes with tech giants such as Apple, Samsung (SSNLF), and China’s (FXI) Huawei and Xiaomi in the wearable space. As we discussed earlier in this series, Fitbit was the only major player to experience a decline in unit shipments in the third quarter, and that too occurred in a growing market.
Fitbit’s revenue expected to fall 6.6% in 2018
Analysts expect Fitbit’s sales to fall 0.4% year-over-year to $568.74 million in the fourth quarter of 2018, which would translate to a 6.6% revenue decline to $1.51 billion in 2018. Fitbit is expected to return to revenue growth in 2019 with sales of $1.57 billion. Sales might also rise by 0.8% to $1.58 billion in 2020. This is still lower than the record revenue of $2.17 billion posted by Fitbit in 2016.