Fitbit IPOed at $30.40. By July, its prices were just breaking $47 a share. Then, by November, it began to make its slow descent to where it now stands: just under $9 a share.
Does this mean wearable devices are on their way out, or does it indicate a massive market shift?
We're siding with the latter, and it certainly appears like Fitbit's CEO James Park is too.
"While Fitbit's shares have taken a tumble, it still reported growth of 23 percent in the third quarter of 2016."
While Fitbit's shares have taken a tumble, it still reported growth of 23 percent ($655 million) in the third quarter of 2016, according to StartupSmart Senior Journalist Emma Koehn. And yes, while this number is down considerably from Q3 of 2015 (growth of 168 percent), Park doesn't seem shocked. In fact, he says the drop is expected.
"As we grow our business, we expect our revenue growth to slow in future periods due to a number of reasons, which may include slowing demand for our products and services, increasing competition, [and] a decrease in the growth of our overall market," Fitbit stated in its quarterly filing.
As competition floods the wearable device market, it becomes more and more difficult for companies (especially those who introduced the product or service) to continue to grow at extraordinary rates. In order to do so, they often need to change their focus and strategy as they adjust to new market conditions. That's exactly what is sounds like Fitbit could be doing.
"We are attracting new customers while our existing ones are upgrading their devices, underscoring the strength of the Fitbit brand and growing relevancy of wearables as part of consumers' everyday lives," Park said.
As the novelty of wearable devices wear off, Fitbit and others have to think about how they're going to address a number of challenges. Three include:
- How to continue to expand general consumer interest in wearable devices and penetrate new markets.
- How to strengthen its existing support.
- How to fend off new competition.
And trust us when we say, Fitbit now has a lot of competitors including tech giants Samsung, Apple, Xiaomi and Garmin.
State of industry is healthy
If increased competition is bad, the market certainly isn't showing it. A report published by Zion Research showed that the mobile health care industry is expected to increase by a whopping 50 billion dollars by 2020.
This increase isn't shocking because people enjoy using their tracking devices to stay more informed about their health. More so, providers use it to collect data, which they can then use to make more accurate medical decisions.