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Is Fitbit in Trouble, or Is This a Buying Opportunity?

Fitbit 's stock price has dropped more than 60% in the past six months, with a particularly sharp plunge starting immediately after the release of the Fitbit Blaze at the Consumer Electronics Show on Jan. 4. The Blaze won't be available to consumers until mid-March, but there are already concerns that the product isn't differentiated enough for Fitbit to keep up with competition such as Under Armour , which released an new ecosystem of connected gear at the same time as the Blaze.

The preceding graph only shows downloads on iOS devices and only in the U.S., but this still gives us a good indicator suggesting that a lot of Fitbit products were given for Christmas and that we can expect some impressive sales numbers when Fitbit announces Q4 sales later this month.

Fitbit's app was the most downloaded app in the iOS app store from Dec. 25-27, 2015. Source: App Annie.

The preceding graph only shows downloads on iOS devices and only in the U.S., but this still gives us a good indicator suggesting that a lot of Fitbit products were given for Christmas and that we can expect some impressive sales numbers when Fitbit announces Q4 sales later this month.

2: Fitbit stock looks cheap.

Fitbit is probably going to report impressive Q4 sales based on the number of holiday season app downloads. The company already raised guidance for the full year when it released Q3 earnings, and now even those raised numbers seem conservative based on holiday sales. Therefore, the stock now looks undervalued after these recent declines, trading at just 15 times forward-looking 2016 year-end earning estimates.

Foolish final thought: Fitbit is a short-term play

If Fitbit does report impressive Q4 sales numbers in line with the recent app downloads, the stock does look attractive at these prices in the short term. However, over the long term, I'm not convinced Fitbit will be able to compete with other companies putting out either far more innovative gear, or similar gear for far cheaper. As of the recent release of the Blaze, Fitbit's lack of differentiation shows little reason to believe that Fitbit can slow its market share loss in this increasingly competitive space.

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The article Is Fitbit in Trouble, or Is This a Buying Opportunity? originally appeared on Fool.com.

Bradley Seth McNew owns shares of AAPL and UA. The Motley Fool owns shares of and recommends AAPL and UA. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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