Fitbit (FIT) stock gained 11.7% on Friday to close trading at $4.10. The stock climbed on September 20 after several reports claimed the consumer technology giant had hired a boutique investment company to explore a sale.
According to Reuters, Fitbit hired Qatalyst to explore the possibility of an acquisition. Qatalyst is reportedly pressing Fitbit for a sale as companies such as Google (GOOGL) may be interested in acquiring it strategically.
Fitbit stock is trading 41% below its 52-week low
Despite its recent rally, Fitbit stock is still trading 41% below its 52-week low. Fitbit has cost investors over the years and has lost over 90% from the record highs it saw in July 2015.
The company has struggled with larger players entering the fitness device segment. Once the undisputed leader in the wearables segment, it has lost market share to Apple, Huawei, and Xiaomi over the last few years.
Apple continues to lead the global smartwatch segment, and Fitbit is lagging behind. Smartwatch shipments rose 44% year-over-year in the second quarter, according to Strategy Analytics. While Apple Watch shipments grew 46%, Fitbit’s shipments fell 7.7%.
FIT stock has been volatile
Fitbit stock fell 20% on August 1 after the company reported its second-quarter results on July 31. Though the company beat analysts’ earnings and revenue estimates, its tepid guidance left investors unimpressed.
The management attributed its poor guidance to low Versa Lite sales. While analysts expect Fitbit to post sales of $399.4 million in the September quarter, the company has guided for $335 million–$355 million in sales.
The stock then gained 5% on August 28 after the company launched a new smartwatch, the Versa 2. It also launched the Aria Air, a Bluetooth-equipped scale that tracks users’ body mass index and weight.
Whereas Fitbit has launched several products across price points over the last few years, it hasn’t regained market share. An acquisition would provide a glimmer of hope for the company as struggles to improve sales in a high-growth market.