Fitbit, Inc. (NASDAQ: FIT)
On Monday after the market closed, Fitbit Inc, the popular leader in the market for wearable fitness monitoring devices, reported record breaking Third quarter results with both revenue and earnings well above analyst’s expectations. The company also announced that it has filed for a follow-on stock offering, spooking investors and sending the stock tumbling almost 10% in after-hours trading.
FIT Earnings and Outlook
Revenue for the 3rd quarter came in at $409.3 million, a 168% year-over-year increase and far above consensus estimate of $347 million. Net income for the quarter was $0.19 per share versus analyst’s expectations of $0.05. Fitbit also raised guidance for the forth quarter with revenue expected to be $620 – $650 million, up from earlier forecast of $583 million, and expected net income of $0.20 – $0.25 per share versus consensus of $0.20 per share. Yahoo Finance
Fitbit announced plans for a stock offering that includes 7 million primary shares from the company and 14 million secondary shares from existing shareholders, In addition, underwriters have a 30 day option to acquire 3.15 million shares from existing shareholders. Referencing the stock offering, Fitbit CFO Bill Zerella said, “It’s very typical for companies that are doing well in terms of their stock price to do a follow-on before the lockup expires,” Investors Business Daily
CEO Comments
“Revenue of $409 million increased 168% year-over-year, exceeding the high end of our guidance, and adjusted EBITDA nearly doubled,” said James Park, Fitbit co-founder and CEO. “Fitbit’s third quarter results demonstrated the continued rapid growth of the Fitbit platform and our team’s ability to execute on the tremendous opportunity we see globally, as we help people reach their health and fitness goals.” Business Wire
FIT Technical Analysis
Despite a stellar third quarter and raised guidance, it was news of the follow-on stock offering that moved Fitbit’s stock price on Tuesday. Not surprisingly, investors and traders panicked driving the stock down 10%. Almost all of the after-hours volume took place in the first hour when the stock dropped to its low of $36.78. The balance of Monday’s after-market activity and Tuesday’s pre-market activity was on very low volume indicating that buyers were not getting involved. Tuesday’s trading saw an early morning volume push to $39 before quickly reversing to the pivotal off-hours trading level near $38. The stock then spent much of the day in a tight range between $38 – $38.50 before breaking down in the last hour to hit lows of the day and close near support at $37.31
FIT’s chart is choppy and without any discernable pattern. The stock is very much in play but only if you are comfortable analyzing real-time price and volume. FIT doesn’t make sense as a long unless it gets above Tuesday’s resistance of $38.60. If that happens, look for more resistance at $39 and then $39.50. If the stock remains strong, the gap fill begins at $39.93 and completes at $40.80. On the short side, Tuesdays close was weak so be prepared for FIT to trade down. Support sits at $37.30 and $37. Below those levels a drop to $36 is likely.
About Fitbit, Inc.
Fitbit, Inc. (Fitbit) is a provider of health and fitness products. The Company’s Fitbit platform combines connected health and fitness devices with software and services, including an online dashboard and mobile applications, data analytics, motivational and social tools, personalized insights, and virtual coaching through fitness plans and interactive workouts. It offers a number of fitness products, including Fitbit Zip, Fitbit One, Fitbit Flex, Fitbit Charge, Fitbit Charge HR, Fitbit Surge and Aria. Its wrist-based and clippable devices automatically track users’ daily steps, calories burned, distance traveled, floors climbed, and active minutes and display real-time feedback to encourage them to become more active in their daily lives. Fitbit Premium is its membership that serves as an around the clock virtual personal trainer delivered to users through any Web browser. It operates FitStar, a provider of interactive video-based exercise experiences on mobile devices and computers. Google Finance
