Fitbit Inc (NYSE:FIT) Outlook Feels Run Down


Pardon the pun, but shares in Fitbit Inc (NYSE:FIT) had a fit yesterday, after the maker of wearable health and fitness trackers delivered a revenue miss and dimmed its outlook.

The stock was down by over a third, closing Thursday at $8.51 on volume of nearly 73 million shares.

Technically, shares have now broken to the downside from an extended period of range-bound, sideways trading since February.

More often than not, such a breakout signifies a resumption of the trend that preceded the trading range. For Fitbit, that trend was decidedly down.

Fitbit Inc (NYSE:FIT) missed on revenue, and the shorts made a killing

Fitbit reported inline third quarter EPS of $0.19 and revenue of $504 million which missed by $3.13 million but was up a solid 23% year on year.

However, net income plunged to $26 million from $46 million a year ago.

“I am pleased to see positive reception for our new products launched in the third quarter. We are attracting new customers while our existing ones are upgrading their devices, underscoring the strength of the Fitbit brand and growing relevancy of wearables as part of consumers’ everyday lives,” said James Park, Fitbit co-founder and CEO. “We continue to grow and are profitable, however not at the pace previously expected.”

His enthusiasm is not shared by investors. As on October 31, about 50% of the company’s float (publicly traded stock) was held short, signifying the extent of conviction that the stock would fall.

Those short sellers likely cleaned up yesterday, when Fitbit fell 33.57%.

Fitbit now sees fourth-quarter adjusted earnings per share (EPS) in a range of $0.14-$0.18, far below analysts’ forecast for $0.75.

It lowered its full-year revenue guidance to a range of $2.32 billion and $2.4 billion, against analysts’ expectations of $2.6 billion.

Investors in the company’s June 2015 IPO, issued at $20, would have made a killing if they had bailed in August 2015 when the stock touched a high of $51.90.

From that high, the stock has lost 84%.


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