Yesterday ultra dominator on the wearables market that was the focus of activity sensors, Fitbit must reinvent itself to try to compete with Apple in the more complicated segment of connected watches. Although 2017 is presented as a year of transition by the management of the company, its bad numbers (and its prospects still clogged) seriously worry the shareholders.
To meet the Nike Edition of the Apple Watch, Fitbit just released this Adidas version of its Ionic watch.
Once dominated by Fitbit, the "wearable" market has largely evolved to the advantage of Apple in recent years following the sharp erosion of sales of activity sensors in favor of real watches connected to more comprehensive features. Problem for Fitbit, the Apple Watch outrageously dominate this market. As a result, Fitibit sales continue to fall, which is confirmed by the company's latest financial results.
In particular, we learn that in 2017, Fitbit delivered 7 million fewer products than in 2016, which represents a tumble in volume sales of -46%. As a result (and despite an increase in sales prices of 8% on average), its annual turnover rose from $ 2.169 billion in 2016 to $ 1.615 billion in 2017 (-34%), although almost maintained in the last quarter of the year at $ 570.8 million. Once consolidated, these annual results show an increase in losses recorded: after losing $ 102.8 million in 2016, Fitbit lost $ 277.2 million in 2017.
New decline in activity expected in 2018
In this context, the brand may well insist that it now has 25.4 million active users, it is impossible to reassure shareholders. On the stock market, the publication of these results has triggered a strong reaction, with a very strong first drop of almost -10% of the share price, below the $ 5 mark. Logically, when we know that despite an optimistic speech, the management of Fitbit already anticipates a further decline in revenue in 2018, with a turnover of 1.5 billion dollars. The years of double-digit growth (from 2012 to 2016, which remains Fitbit's best exercise) seem to be over. However, Fitbit remains ambitious. The brand recently negotiated some interesting buybacks – Pebble at the end of 2016, Vector and Twin Health in 2017 – and plans to gain a foothold in the connected health market, thanks in particular to a partnership with Dexcom and investments made in the start-up Sano, two players in the measurement of blood glucose. It is also planning the launch of a new range of smartwatches this year. "We have made significant progress in 2017 in a very changing market (…) In 2018, we will focus on reducing our expenses, continuing to grow in the connected watch market and supporting our community in their sports activities and monitoring their health status, "commented James Park, co-founder and CEO of Fitbit.