Fitbit Hit By Low Revenue Forecast
Tough competition in the fitness wearable market has seen Fitbit report a significantly lower than expected revenue forecast for the Christmas season.
Fitbit shares dropped by over 30 per cent in extended trading in the United States, falling to US$8.93. Shares in the fitness device maker are expected to hit record lows during trading on Thursday.
The company has forecasted revenue of US$725-750 million for the holiday season. Thomson Reuters I/B/E/S reported the figure is significantly lower than analyst estimates of US$985.1 million.
While analysts predicted growth of up to 38.4 per cent in the final quarter of the year, up from 23.1 per cent on the previous, the forecast would result in growth of just 5.4 per cent at the top end.
Fitbit CFO Bill Zerella told Reuters that a softening in the wearables market, as well as the transition to new products which included production issues for the company’s Flex 2 device, was the cause of the low revenue forecast.
The company remains the market leader in the wearable device market, according to IDC, but rivals including Apple, Samsung, Xiaomi and Garmin have challenged Fitbit’s market share.
Two new devices launched by Fitbit in August, the Charge 2 and the Flex 2, sold 5.3 million in the third quarter. The sales figures were slightly higher than average estimates of 5 million, but a lower than expected selling price of $93, down from $98.25, also affected the company’s revenue.