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NEW YORK, United States — Fitbit Inc., the maker of wearable health-tracking devices, forecast revenue in the current quarter that fell short of analysts' estimates, saying the global introduction of their newest watches may push sales later into the year.
Sales in the first quarter will be in the range of $420 million to $440 million, the San Francisco-based company said Monday in a statement. That compared with the average analyst projection of $485 million, according to data compiled by Bloomberg.
Fitbit has been the leading seller of wearable fitness trackers, but investors are concerned that competition from the likes of Apple Inc., Samsung Electronics Co., and Xiaomi Corp. may blunt the company's growth. Fitbit's market share fell to 22 percent in the third quarter of 2015 from 33 percent a year earlier, according to IDC. In addition to rivalry from the tech giants, companies such as Fossil Group and Under Armour Inc. have developed connected fitness devices.
“The competition has always been there,” said Shebly Seyrafi, an analyst at FBN Securities, who has an outperform rating on Fitbit. “They’re going to have to live with a lot of that competition.”
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Shares declined 16 percent in extended trading. Earlier, the stock rose 5.9 percent to $16.52 at the close in New York.
Fourth-quarter revenue almost doubled to $711.6 million, Fitbit said in the statement. Analysts on average projected $648 million. Profit before certain items was 35 cents a share, compared with the 25 cents analysts predicted.
The company said it sold 8.2 million connected health and fitness devices in the fourth quarter of 2015. Fitbit has been expanding its product lineup and now sells eight devices, including two recently announced models, Alta and Blaze.
“The timing of shipments into sales channels may result in the majority of reorders, especially for Alta, coming in the second quarter of 2016,” Fitbit said in the statement.
The decline in Fitbit’s shares, which have lost almost half of their value this year, are tied more to the expiration of a lockup on a secondary offering and a selloff in technology stocks than the underlying business, Seyrafi said.
Shares also took a hit last month after the introduction of Fitbit’s Blaze, a smartwatch that features on-screen workouts and a connected GPS. Betty Chen, an analyst at Mizuho Securities, said investors feared it would compete with the Apple Watch as an inferior product. But Chen says Fitbit purposefully focused on a few features for the Blaze to keep the price point around $200, a cheaper option than the Apple Watches.
“While we certainly do not want to discount smartwatches, Apple Watches in particular, consumers are telling us they find very different needs for those devices, and for now they find some smartwatches in the market very costly,” said Chen, who has a buy rating on Fitbit.
By Selina Wang; editors: Jillian Ward, Andrew Pollack and Molly Schuetz.
