FitBit Inc. (NYSE: FIT) shares have posted an ugly streak, based on earnings and the perception it has mediocre products. Prospects for the company are looking up, at least based on a drop in short interest. For the period that ended March 15, shares sold short in FitBit declined 19% to 31.8 million. However, the short interest is still 19% of the float.

FitBit’s shares have continued to struggle this year, down 16% so far to $5.60. Over the most recent two-year stretch, the numbers are worse. The stock is down 67%, against a 51% increase in the S&P 500.

One piece of good news for FitBit is that the number of wearables shipped worldwide is expected to rise 15.1% this year to 133 million, according to research firm IDC. By some measures, FitBit trails only Apple in this category.

After a period in which FitBit revenue fell, it stabilized in the most recently reported quarter, flat at $572 million. The net loss narrowed sharply to $4.7 million from $125.7 million in the same quarter of 2016. The first quarter of this year will be weak, but it may be offset longer term by the release of new products:

We expect limited revenue from new product introduction. With consumer demand shifting towards smartwatches, we expect revenue to decline approximately (20%) to (15%) year over year and to be in a range of $240 million to $255 million.

Days later it:

… unveiled Fitbit Versa, a modern, intuitive smartwatch at an approachable price. The lightest metal smartwatch in the U.S. market, it offers a comfortable design and a new dashboard that simplifies how you access your health and fitness data. Advanced health and fitness features like 24/7 heart rate tracking, onscreen workouts, and automatic sleep stages tracking meet smart features like quick replies on Android, wallet-free payments on Fitbit Versa Special Edition, and on-device music – all with 4+ days battery life. Versa is available for presale today at $199.95, with global retail availability in April 2018.

In general, the product has gotten good reviews. Some investors, at least those who are short, appear to acknowledge that.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.