Wearable tech has been one of the biggest innovations in consumer-facing technology over the past decade. Among those, Fitbit Inc (FIT Stock Report) has emerged as one of the most interesting. Although the device has proven to be popular, the company has not fared well at all. We outlined this company in our June Report: 10 Most Popular Penny Stocks on Robinhood [June 2019 Edition].
Specifically, it was cited that just because it was popular didn’t mean it was a good penny stock to buy. Needless to say, despite generating a bit of growth, FIT stock has continued to fall. In order to generate growth, the company has made a concerted effort to move into other products in order to end the dependence on device sales.
Penny Stocks & The Wearable Tech Industry
Experts believe that the wearable tech industry will grow much more strongly in the next five years and hence, it is worthwhile to speculate on Fitbit’s situation five years down the line.
As per research from IDC, a tech researcher, wearable tech is going to be a much bigger market in the next five years. The number of units sold per year could touch 279 million. That is definitely good news for Fitbit, which managed to record sales of 13.9 million devices last year. In the first quarter of 2019, it sold 2.9 million devices.
The Q1 2019 sales figure a 32% year on year rise for the same period. However, it is also necessary to note that Fitbit now faces tough competition from big-ticket companies like Apple, Xiaomi, and Huawei in the particular space.
Popularity Of Wearable Devices
The popularity of wearable devices has been a problem for Fitbit as it has driven down the average selling price of a device. Hence, in Q1 2019, the company only reported a 10% rise in revenue despite managing to generate a 32% rise in sales. That being said, the user count is apparently on the rise and that could prove to be a boon over the long term. Profits fell to 32.9% from 46% in the prior year period and experts believe it is not going to improve any time soon.
It has been the worst year for Fitbit as the stock has slumped 40% from its 52-week high peak price of $7.12 in February. Moreover, the stock is down 20% so far this year and recently made an all-time low of $4.21 on the NYSE. Now that FIT is a penny stock, does it even have a chance to recover?