HomeNewsAfter falling sales numbers, Fitbit’s stock price collapses by over 33%

After falling sales numbers, Fitbit’s stock price collapses by over 33%

Digital health and fitness company Fitbit reported its third quarter earnings earlier today, and shortly thereafter its shares fell off a cliff. Its guidance for the fourth quarter was especially weak, with the company citing softer demand for its products, a 45 percent contraction in growth in Asia-Pacific markets, and supply constraints around its new Flex 2 wristband.

According to its latest quarterly numbers, the company made $26.1 million in the third quarter of 2016 compared with $45.8 million during the same quarter a year ago. In mid-September, the company released the Fitbit Charge 2, a mid-range $150 device. Many financial analysts believe that the market for the popular fitness tracker may be hitting its saturation point.

The Flex 2 supply constraints are stemming from production issues, with Fitbit chairman and chief executive officer James Park pulling the curtain back a little bit on Fitbit’s manufacturing process. Even though the Flex 2 looks like a simple wristband, Park said, “it’s fairly complex and that’s due to its incredibly tiny form factor.”

Interestingly, Park waved off any notion that the launch of the Apple Watch Series 2 this fall had any impact on Fitbit’s quarterly sales — which, at 5.3mm devices, were up 11 percent year over year. “We’re not seeing impact from the competitive situation,” he said on the company’s earnings call.

Fitbit needs to create a hit product like Charge HR, which introduced continuous heart rate reading, rather than having products such as Blaze and Charge 2, which just bring incremental improvements, analysts said.

Between 2011 through 2015, Fitbit made a total of $246 million. It had two profitable years in 2015 and 2014 and losses prior to that. Fitbit is also facing competition from Chinese electronics company Xiaomi, Garmin Ltd, Samsung Electronics and Apple Inc with its Apple Watch line.

Read Also: Smartwatches haven’t seen positive sales in 2016

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