Fitness band maker Fitbit Inc.FIT went public on Jun 18.The company priced its initial offering at $20 a share, and the opening price of $30.40 means the shares were already up over 50%. After nearly a month, it is now trading at $47.78 (closing price on Jul 16).
But the company operates in a competitive and crowded wearable tech market. Besides growing competition from smart watches from tech companies like Apple AAPL , Samsung and Motorola MSI , it faces competition from smaller companies like Misfit, which recently reduced the prices of its wearable fitness trackers.
The Misfit Flash, a basic tracker which comprises a step counting and sleep tracking feature, now costs $30 (earlier $50), while the aluminum-clad Misfit Shine now costs $70, down from $100 previously. The company also launched a tracker named the Misfit Flash Link, which costs $20 and a smart button that's able to work with the Misfit Link app.
Founded in 2007, Fitbit specializes in wearable activity tracking devices that record personal data, including the number of steps taken, distance traveled, calories burned, and other wellness-related metrics. There are currently 6 different models, with some devices worn around the wrist and others clipped on to a piece of clothing. Ranging from $59.95 to $249.95 per unit, Fitbit devices are priced competitively and offer consumers a variety of options.
Fitbit also offers compatible mobile applications, allowing users to track their information and further interact with their personal data. Additionally, a partnership with American fashion designer Tory Burch has given the company a new line of styled products.
Is Misfit a Threat for Fitbit?
With Misfit having slashed the prices of its trackers, the products are now a lot cheaper than the Fitbit ones. Therefore consumers opt for the relatively economical products in these troubled economic times.
As a direct competitor, Misfit might pose a threat to Fitbit's top line especially amongst first-time adopters, and could be a cause of concern for its investors.
Fitbit currently has a Zacks Rank #3 (Hold). A better-ranked stock in the space is Nova Measuring Instruments Ltd. NVMI , which sports a Zacks Rank #1 (Strong Buy).
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