Fitbit, a prominent player in the wearable device industry, made headlines recently after announcing a downward revision in its 2019 revenue forecast. The primary reason cited for this disappointing outlook was the lackluster sales of its newly released smartwatch, the Versa Lite. Consequently, Fitbit’s stock took a significant hit, dropping by a staggering 16% to an all-time low.
Specifically, during the second quarter, the company saw a sharp 27% decline in smartwatch revenue compared to the previous year. This decline was primarily attributed to the underwhelming performance of the Versa Lite model, which was introduced to the market in March at a lower price point than its full-featured counterpart. Despite positive feedback from consumers, the Versa Lite fell short in terms of functionality, prompting customers to opt for pricier smartwatches with more features.
Faced with tough competition from tech giants like Apple and Samsung, Fitbit’s foray into the smartwatch market was a strategic move to counter the slowdown in sales of its fitness trackers. However, the disappointing performance of the Versa Lite has cast doubt on the company’s financial outlook. Chief Financial Officer Ron Kisling acknowledged that Fitbit is likely to incur losses in the first three quarters of the year before potentially turning a profit in the fourth quarter.
In response to the Versa Lite’s lackluster sales, Fitbit adjusted its 2019 revenue guidance to a range of $1.43 billion to $1.48 billion, a decrease from the initial forecast of $1.52 billion to $1.58 billion. Analysts have expressed concerns about the overall health of Fitbit’s business, particularly with regards to the performance of its health segment, which connects users with healthcare professionals.
Despite these challenges, Fitbit remains focused on diversifying its revenue streams through collaborations with health insurers and strategic acquisitions in the healthcare sector. However, investors are closely monitoring the growth of Fitbit’s health business, which registered a 16% growth rate in the second quarter but did not meet expectations.
Looking into the future, Fitbit foresees revenue of $335 million to $355 million for the third quarter, falling below analysts’ estimates. The company also anticipates an adjusted loss ranging between 9 cents and 11 cents per share, in contrast to analysts’ projection of a 2 cents profit per share. In the second quarter, Fitbit reported a narrower-than-expected loss of 14 cents per share on revenue of $313.6 million.
Despite the current challenges, Fitbit remains positive about its long-term prospects in the wearables market. While its shares have declined by 15.5% this year, the company is implementing strategic initiatives to boost growth and profitability moving forward. Investors will be closely monitoring Fitbit’s performance in the upcoming quarters to gauge its ability to recover from this setback.
For more information on Fitbit and its financial outlook, please visit the official Fitbit website. Additionally, you can stay updated on Fitbit’s news and developments by checking out the latest updates on MarketWatch.
