Smartwatch accounted for 44% of total sales last year

Fitbit (FIT) is one of the top players in the wearables space. It competes with tech giants such as Apple and Xiaomi as well as with niche players such as Garmin (GRMN) and Fossil (FOSL) in the space.

Fitbit stock saw an impressive rally between December 2018 and February 28, 2019, when it rose 38.5% driven by solid forecasts during the holiday season. Optimism about Fitbit’s Versa drove its revenue in the fourth quarter and beyond.

Fitness Trackers Are Likely to Hit Fitbit’s Sales in 2019

Ready to put your morning scrolling to use? Sign up for Bagels & Stox, our witty take on the top market and investment news straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

Though Fitbit’s smartwatch sales rose 437% and accounted for 44% of its total sales in 2018, the company posted negative overall revenue growth.

In fact, Fitbit’s sales fell more than 6% year-over-year in 2018. This sales decline was driven by tepid fitness tracker sales for Fitbit, which offset its robust smartwatch growth. Its total number of devices sold fell from 15.3 million in 2017 to 13.9 million in 2018.

Profit margins affected

Fitbit’s 2018 gross margin contracted to 39.9% from 42.8% in 2017. Its device mix, however, drove its average selling price up 4% to $105. Though Fitbit is the number-two selling smartwatch company in the United States, it sells its devices at an aggressive price point to expand its consumer base.

The gross margins of Fitbit’s smartwatches are much lower than those of other fitness trackers and are thereby affecting its profit margins.

If we consider the chart above, we can see that Fitbit’s device sales have now fallen for two consecutive years. Though Fitbit expects its total device sales to rise this year, their average selling price is expected to fall. Wall Street was unimpressed after Fitbit forecast sales growth of 1%–4% for 2019.

Latest articles

This year, Pfizer (PFE) stock has fallen 0.34% and Bristol-Myers Squibb (BMY) stock has fallen 6.48%. Both companies are focused on strengthening their position in the high-growth oncology and immunology markets. Let's take a closer look at each.

Walt Disney’s (DIS) latest movie, Toy Story 4, has reportedly broken records in the opening weekend with $118 million in sales. However, the opening weekend collection was behind analysts’ expectations of at least $150 million in the first weekend.

24 Jun

Will Home Depot’s Upward Momentum to Continue?

WRITTEN BY Rajiv Nanjapla

As of June 21, Home Depot (HD) was trading at $209.39, which implies a rise of 9.7% since the announcement of its first-quarter earnings on May 21. Also, the company was trading at a premium of 32.4% from its 52-week low of $158.09 and a discount of 2.8% from its 52-week high of $215.43.

On June 21, Aurora Cannabis (ACB) made an announcement that indicated that it will move towards higher margin vape products. In addition, the company also believes concentrates and edibles will command higher margins. In anticipation of this development, the company announced the expansion of its facility to capitalize on growth related to these segments.

Shares of Mondelēz International (MDLZ) are scaling new heights thanks to its stellar gains so far this year. Mondelēz stock is up 38.0% on a YTD (year-to-date) basis, and it closed at $55.25—just a shade lower than its 52-week high of $55.71—on June 21.

24 Jun

How Long Will Facebook's Libra Fuel Bitcoin Rally?

WRITTEN BY Mayur Sontakke, CFA, FRM

Ever since the news about Facebook’s (FB) cryptocurrency project broke, Bitcoin has rallied on the hope that Facebook’s entry in the space will help make cryptocurrencies mainstream. Facebook’s cryptocurrency will be called Libra and will be governed by an association with 28 founding members across industries.

172.31.16.229