Source: Fitbit roadshow and S1
The only concern is Apple. The Apple watch officially went on sale online in late April. Its sport watch is very likely to impact Fitbit sales. The IPO has been well timed for the Fitbit sellers right before we have any idea how Apple's watch is affecting sales. Even with these concerns I was surprised to see that Fitbit is growing faster than I thought and that it is very profitable.
One good angle for Fitbit has been their partnerships with corporate wellness programs. Fitbit can help companies reduce premiums and keep their employees fit and healthy a worthy corporate expense. The success of Lululemon has shown that we all have to look good when we exercise. Don't worry Fitbit has you covered with a collaboration with Tory Burch for Fitbit accessories.
Source: http://www.fitbit.com/toryburch
The hardware bands drive sales but Fitbit has plans to monetise its user base. It can upsell services to their 9.5 million active users with offers like a 24/7 virtual trainer at $49.99 per year. These services are only small 1% of sales but future growth will depend on subscriptions and software. While it is a hardware company it does have attributes of software companies in Fitbit's network effect. When users sign up they can find and engage friends and family keeping users committed to exercising and staying with Fitbit. Exercising is always easier with friends. We don't know the final IPO price (an important detail) but the outlook for fitness wearables is looking strong. As they say commit to be fit(bit).
Jason
Decisive has no position in Fitbit stock. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
