Fitness device provider Fitbit (NYSE: FIT) might have been an exciting stock years ago, but today it’s lost its luster as it lost the majority of its worth over the past few years. Now, however, the company is showing signs of a potential turnaround.
Fitbit made news when it came out that the company had hired a boutique investment firm to explore a potential sale, rumors which sent the stock surging by a double-digit percentage on Friday.
In particular, Fitbit hired Qatalyst Partners to explore the possibility of finding a buyer, although an anonymous source familiar with the matter reported that no deal was imminent. Qatalyst has been suggesting to Fitbit the possibility of a sale for weeks now, arguing that it could find potential buyers like Google (NASDAQ: GOOG) or even some private equity firms.
While Fitbit has remained a strong company in the fitness tracker market, it has seen its shares fall as more consumers moved to smartwatches, with Apple siphoning off a considerable portion of Fitbit’s previous customer base.
Back in July, Fitbit had to cut its 2019 revenue forecast due to disappointing sales of their new, low-cost smartwatch models. Overseas, the company is facing competition from cheaper producers such as China’s Huawei and Ziaomi, both of which are offering more affordable fitness watches that are chipping away at Fitbit’s market share in the region.
While Fitbit announced back in August that it had signed a lucrative contract with the Singapore government to provide fitness trackers for a health program, potentially reaching up to one million extra users in the process, investors weren’t impressed enough by this announcement to see a significant turnaround in the stock price.
Spokespeople from both Fitbit as well as Google declined to comment on the news, saying that they don’t respond to speculation. Considering that Google is in the smartwatch business as well, it would make sense for the two companies to come together in a potential buyout deal. Taking premiums into consideration, Fitbit would likely be valued between $1.5 billion and $2.5 billion.
Shares of Fitbit were up 11.7% percent on Friday in response to the news. The company, who has a market cap of just $1.06 billion, has seen its share price fall by over 90 percent over the past five years. Trading in the high $40s back in 2015, the stock has since steadily tumbled to its current price at $4.10 per share. While a potential buyer would send the stock surging, its more or less impossible for Fitbit to recover back to its earlier highs.
Fitbit Company Profile
Fitbit Inc is a provider of health and fitness devices. The company’s platform combines connected health and fitness devices with software and services. Its platform includes a family of wearable devices which include health and fitness trackers and smartwatches, enable the users to view data about their daily activity, exercise and sleep in real-time.
The company software and services which include an online dashboard and mobile app, provide users with data analytics, motivational and social tools, and virtual coaching through customized fitness plans and interactive workouts. – Warrior Trading News