Fitbit stock soars 48% on market debut
19 Jun 2015
US-based Fitbit Inc, a maker of wearable fitness-tracking devices, made its stock market debut yesterday on the New York Stock Exchange (NYSE), surging 48 per cent at close, even after the company priced its initial public offering (IPO) above its maximum price range.
San Francisco-headquartered Fitbit, which sells wrist bands like Fitbit Surge and Fitbit Charge, had set the IPO price at $20 per share, above its previously announced range of $17 to $19 a share, and also increased the offer size by 6 per cent to 36.6 million shares from 34.5 million.
During its initial hours of trading, the stock under the symbol 'FIT' on NYSE jumped 57 per cent to $31.45 before closing at $29.68 a share, up 48 per cent.
Based on the IPO price, Fitbit is valued at $4.1 billion.
Fitbit founded in 2007 by James Park, the company's CEO, and Eric Friedman, its chief technical officer, is engaged in the development of wireless activity-tracking wristband, which operates as a pedometer, sleep monitor and watch.
The plastic gadget has a small LED display and the wrist band is about three-fourth inch wide and comes in different colors.
Fitbit offers a number of fitness products, including Fitbit Zip, Fitbit One, Fitbit Flex, Fitbit Charge, Fitbit Charge HR, Fitbit Surge and Aria. The devices 3D motion sensors automatically track users' daily steps, calories burned, distance traveled, floors climbed, and active minutes and display real-time feedback to encourage them to control weight and to become more active in their daily lives.
Fitbit's platform also includes its online dashboard and mobile apps, which wirelessly and automatically sync with its devices.
Apart from the US, the company has offices in Ireland, China, Korea, Belarus, India and Japan and sells its products through 45,000 retail stores and also online in more than 50 countries.
As of March 31, 2015, Fitbit has sold over 20.8 million devices since inception.
Last year, Fitbit sales nearly tripled to $745 million compared to the previous year's $271 million with the company making a net profit of $132 million.
For the March quarter, Fitbit reported sales of $337 million and a net profit of $48 million.
According to market research firm IDC, consumer spending on wearable devices market is growing faster than any segment in the global consumer electronics market, and is expected to reach 28 billion by 2019 with 126 million devices shipped, compared to 19 million units shipped in 2014.
Being one of the drivers of the growth of wearable devices market coupled with a strong debut in the stock market, Fitbit expects significant growth opportunities despite competition from Apple watches and android-based tracking devices.
In an interview with New York Times, Park said, ''We are the clear market leader with 85 percent market share. Fitbit is synonymous with health and fitness tracking, and that gives us a competitive advantage in the marketplace.''
Park said the IPO would provide the company with capital to grow its business, allowing for investments in software, hardware and even acquisitions.
Fitbit's IPO was run by Morgan Stanly, Deutsche Bank and Bank of America Merrill Lynch.
Another consumer electronics company GoPro which made its IPO debut in last June, was well received by the stock market. The shares of the HD video camera maker have more than doubled during the past one year.
