Its hard to pick stocks that will go up in the downward trend we are seeing in markets today. So for my next Big Bet Stock Pick I am choosing to short a stock instead. Fitbit is getting whacked this morning of 2/23/2016, down at one point close to 20% ($13.30) and sitting right above its all time low. But as bad as things are today for Fitbit, I think they will get worse down the line.
The big move down in Fitbit’s price comes on the heels of more great earnings but forward guidance that was well below analysts estimates. The guidance is often the reason stocks with good current earnings tank, as investors care little about today and the past instead focusing almost entirely on the future. In addition to the guidance we are seeing a handful of analysts downgrade the stock, one going as low as $7 a share which would take the stock down close to another 50%.
Strong Brand But Not Much To Offer
The Fitbit brand is strong as shown buy their current earnings but the company has one huge problem. People want more than a fitness tracker that counts steps, keeps track of miles, and monitors your heart rate. There is also a dispute about whether Fitbit’s heart rate monitor is accurate along with a class action suit so that doesn’t help the stock either. In order to occupy ones wrist, people are finding that the more useful tricks a fitness band / smart watch does, the better.
Fitness trackers are nice for awhile but I know I have grown tired of mine. I just want something that will do more as counting steps and miles is not enough to keep me wearing my current Charge HR. That is probably why Fitbit recently announce the Blaze that sells for $200 and looks very similar to the Apple Watch. But it doesn’t have an app store and in every respect is just a cheap knock off of the Apple Watch. For anyone who has the money or the willingness to save, why not just get an Apple Watch that can do so much more than the Blaze?
Ultimately I think, people grow tired of fitness bands and either want more or decide they don’t need anything. Unfortunately for Fitbit, they make good/great fitness bands but little else that is compelling. I believe the fitness band industry either already shrinking or will soon start to. There just isn’t a compelling case to keep wearing something that does so little when there are better alternatives out there that do so much more.
Shorting FIT down to the $7 to $10 range is the play I am calling my Big Bet Stock Bet. Please remember though, this website is for entertainment purposes only and you should NEVER take the advice I give as a recommendation. Always consult a financial planner or stock broker and do your own homework to come up with your own conclusions before buying or shorting any stock.