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Fitbit reported a net loss of US$4.7mln, or 2 cents a share, in the quarter following a net loss of US$125mln, or 56 cents a share, in 2016. The pros were modeling a breakeven on $588.1 million in sales. Finally, Stifel Nicolaus upgraded Fitbit from a "sell" rating to a "hold" rating and dropped their price objective for the company from $6.00 to $5.50 in a report on Wednesday, January 31st.
The Company said that their recently launched smartwatch was not selling as expected, raising concerns about the company's ability to become profitable again in the near term. (NASDAQ:AAPL), and then low-end choices from Xiaomi and Huawei.
"We made important progress in 2017 under rapidly changing market conditions" Park said in the report. "We delivered on our full-year guidance and drove down operating expenses while continuing to invest in innovation".
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The company's stock is now moving with a -ve distance from the 200 day SMA of approximately -5.19%, and has a solid year to date (YTD) performance of -2.98% which means that the stock is constantly adding to its value from the previous fiscal year end price.
Guidance-wise, the company is calling for sales of between $240 million and $255 million, down between 15% and 20% from Q1 2017's top line. That's expected to translate into a loss of between 18 cents and 21 cents. For the current year the company's revenue estimates are $1.63 Billion compared to low analyst estimates of $1.62 Billion and high estimates of $1.65 Billion according to the prediction of 11 analysts.
The outlook is understandably discouraging, particularly in light of the smartwatch outlook. The company has market cap of $1.27 billion. The company has been introducing new products to increase its revenue base but these products which focus more on health and wellness are unable to drive enough revenues for the company. Park mentioned partnerships with DexCom, Inc.
Still, Fitbit said demand was "impacted by the confluence of seasonality in our business and the accelerated shift in consumer purchasing behaviors towards smartwatches".
In retrospect, last quarter's tepid results shouldn't come as a complete surprise. The firm offers Fitbit Zip, an entry-level wireless activity tracker that allows users to track daily activity statistics, such as steps, distance, calories burned, and active minutes; Fitbit One, a clippable wireless tracker, which tracks floors climbed and sleep, as well as daily steps, distance, calories burned, and active minutes; and Fitbit Flex 2, a water-resistant fitness wristband that tracks pool swims comprising laps, duration, and calories burned in the Fitbit App.