The Rise and Fall of Fitbit's Stock Price

Fitbit Inc. (FIT), a pioneering developer of wearable fitness-tracking devices, saw its share price jump nearly 50% on the day of its celebrated listing in June 2015. The share price nearly doubled from there in the following weeks, reaching $51.90. That marked the peak of a dizzying ascent and decline, which saw the price steadily sink in the following years, to below $3 just four years later—a drop of more than 90%.

The share price jumped in late 2019, when Google announced it would buy the company in a $2.1 billion deal.

Key Takeaways

  • Fitbit's stock price jumped nearly 50% on the day it was listed, and nearly doubled from there in the following weeks, reaching $51.90.
  • But Fitbit's share price would quickly reverse and begin a long, relentless slide that took it under $3 just four years later, as the company faced growing competition and its own internal struggles.
  • Google struck a deal to buy Fitbit for $7.35 a share in November 2019.

Operating History

Fitbit began operations in 2007. As a first-mover in the wearables market, the Fitbit brand quickly became synonymous with fitness tracking. By 2012, Fitbit device sales had broken through the 1 million mark as momentum continued building across the market. In 2014, the year before its IPO, Fitbit captured 41% of the worldwide wearables market, with sales of more than $745 million and net income of nearly $132 million.

Lead-Up to the IPO

Fitbit sold 3.9 million devices during the first quarter of 2015, an increase of 129.4% over the same period in 2014. However, despite the furious growth in sales, Fitbit's market share fell by nearly one-fourth, from 44.7% in the first quarter of 2014 to 34.2% in 2015.

The IPO and After

Fitbit's IPO in June was met with excitement right out of the gate, given the company's competitive position and fast sales growth in a booming market. After rising nearly 50% during the opening day of trading, the stock continued trending up until second-quarter 2015 earnings were reported in August. Despite handily beating estimates, Fitbit's share price soon sank below $40. Concerns seemed to be linked to a decline in gross margins as the company struggled to pump out 4.4 million devices to a hungry market.

In November of that year, the company announced another round of strong earnings results, including a doubling of the number of device sales from a year earlier. But it also announced plans for a secondary offering of 7 million shares, just months after its IPO, as well as additional sales by existing shareholders, sending its share price tumbling by more than 8%. Although the secondary offering was eventually amended to 3 million shares, investors were worried about Fitbit's quick return to the markets for additional working capital.

Rising Competition

While Fitbit was a pioneer in wearables, it has faced a growing number of competitors from all directions in recent years, including low- and mid-priced fitness wearables from companies such as Jawbone and Xiaomi, as well as offerings in the middle- and high-end fitness segments from sports and technology giants such as Nike, Garmin, Microsoft, and Samsung.

In January 2016, Fitbit unveiled a new smartwatch product, called the Fitbit Blaze, to compete against the Apple Watch and other similar offerings. The Blaze was met with some skepticism from investors, and Fitbit's share price fell nearly 20% on the day. The hits kept coming. The same month, news emerged of a class-action lawsuit against Fitbit claiming the company's devices are inaccurate, particularly its heart rate monitor. in the monitoring of heart rate.

Google Comes Calling

Rumors of a deal between Google and Fitbit—and then news of the deal—sent Fitbit shares surging above $7 in late October and early November, but the price has come off of those highs as doubts have arisen about the fate of the deal. Fitbit would give Google an avenue to compete with Apple's smartwatch, as well as access to valuable data collected through the devices. But that data collection, though, is the focus of regulators in Europe and elsewhere, as are questions of fair competition, raising some doubts about whether the deal will go through.