FitBit Short Interest Falls as It Launches Smartwatches

Consumer Electronics

Published: March 27, 2018 6:40 am

Last Updated: January 12, 2020 2:02 am

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.

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