Fitbit, Inc. (FIT) shares plummeted 12% to fresh all-time lows on Tuesday after the company reported lower-than-expected fourth quarter financial results after the closing bell on Monday. Revenue fell 0.5% to $570.8 million – missing consensus estimates by $18.09 million – and net losses of two cents per share missed consensus estimates by two cents per share. While international growth was strong, domestic declines triggered the earnings miss.
With growing competition from Apple Inc.'s (AAPL) Watch 3 and Garmin Ltd.'s (GRMN) Fenix 5, Fitbit's full-year guidance came in well below expectations. Management projects "limited revenue from new production introduction," with first quarter guidance of $240 to $225 million – missing consensus forecasts calling for $340.3 million – and a projected net loss of 21 cents to 18 cents per share versus consensus forecasts calling for a loss of nine cents per share. (See also: Fitbit Launches Make-or-Break Smartwatch.)
From a technical standpoint, the stock fell from its 50-day moving average at around $5.60 to below prior support at around $5.00 and fresh all-time lows. The relative strength index (RSI) moved slightly lower to 39.07, but the moving average convergence divergence (MACD) could see another near-term bearish crossover. These technical indicators suggest that the stock could continue to see selling pressure before experiencing consolidation.
Traders should watch for support near S1 levels at $4.75 and a close above the critical $5.00 level. If the stock holds these levels, traders could see consolidation between $5.00 and the pivot point and 50-day moving average at around $5.50 over the near term. A close below $5.00 could set the stage for a new bearish downturn. If the stock breaks below S1 support at $4.75, traders should watch for a move to S2 support at $4.34. (For additional reading, check out: Fitbit, Inc.: How It's Fared Since Its 2015 IPO.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.