Tracking Fitbit Inc – Time To Put It Back on Your Watchlist

An image of a stock chart displayed on a tablet Credit: Shutterstock photo

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Fitness tracker company - and more recently, smartwatch company - Fitbit Inc (NYSE: FIT ) isn't likely to ever topple the ubiquitous Apple Inc. (NASDAQ: AAPL ) as long as Apple chooses to be in the business. Between the influence of its name and its deep pockets, Apple is just too great a foe.

But because Fitbit has been second fiddle doesn't necessarily mean FIT stock itself will forever be un-ownable. In fact, take a look back at the chart over the past few months. You'll find a very compelling reason to take a swing on it now.

And as it turns out, the fundamentals somewhat support the budding rally effort.

Let's be honest. Fitbit is a work in progress. While its fitness trackers were all the rage a couple of years ago, the company - and the market - overestimated just how interested the world was in keeping constant tabs on its activity.

The premise of wrist-worn digital tools, however, was validated. Validated enough for rival Apple and even the fashion-oriented Fossil Group Inc (NASDAQ: FOSL ) to wade deeper into the smartwatch market. Between those two giants and fringe newcomers like Pebble and a few other unlikely names getting into the business, it's not surprising Fitbit, and by extension, the FIT stock price, has struggled.

Ionic Lineup Helps Repositions Fitbit

With the Ionic lineup's recent launch, Fitbit seems to be doing something it should have done a while ago. It has created a product with a specific and distinguished purpose.

For those not familiar with it, Fitbit's Ionic is the smartwatch people actually wanted a couple of years ago. Though not quite as powerful as the Apple smartwatch, the Ionic can play music, track physical activity, provide basic GPS information and serve as an overreaching health monitor. It's arguably not as powerful as Apple's watch. But it also operates without the need for constant connectivity to an Apple iPhone.

The consumer response to the Ionic has been surprisingly firm, all things considered. Perhaps most encouraging is that institutions are embracing it. United Continental Holdings Inc (NYSE: UAL ) recently developed an app for the device . And, though they're not specifically using Ionic, hospitals are now issuing Fitbit fitness trackers to patients as a means of getting them up and on their feet, and out of the building, as quickly as possible.

Both point to a much-needed repositioning of the brand yours truly here discussed over a year ago , suggesting Fitbit would be better served by selling its hardware as a tool rather than a toy.

That's starting to happen.

Brewing Investor Interest for FIT Stock

To be clear, Fitbit is anything but a rock-solid investment right now. Nobody who owns FIT stock can afford to take their eyes off of it. And anybody who's mulling a position will want to think long and hard about it before pulling the trigger.

Nonetheless, it is curious how shares of this largely left-for-dead organization are starting to make some amazing technical progress that hints of a turnaround.

Take a look at how things have taken shape for the FIT stock price over the past few months. We've seen a short string of higher lows and higher highs. And we've seen bullish crosses of all the stock's key moving average lines. The shape is also a bullish cup-and-handle pattern. It hints at more upside ahead now that the brim of the cup around $6.94 has been broken.

Click to Enlarge

A bullet-proof buy signal? Not at all. In fact, if you look closely at the chart, you'll see FIT stock has already peeled back from the thrust above the brim line of the cup. Traders aren't exactly emboldened here.

Still, it's a noteworthy change of heart for a stock that was untouchable a year ago.

Looking Ahead for FIT Stock

The headlines remain less than encouraging - some of them anyway. And, the doubters may well be vindicated in the end. Just for the record though, analysts are looking for a modest top line improvement next year , and a significant improvement in Fitbit's bottom line after revenue and income stumbled in 2017 . The expected rekindling coincides with new, more marketable products and a new institutional interest in smartwatches.

Meanwhile, the shape of the chart says investors are starting to believe in the turnaround, even if most of them aren't saying so yet. With the next strong break above the $6.94 level, they may well start to vocalize their bullishness.

If nothing else, all these clues and hints together are a reason to put FIT stock back on your watchlist.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter , at @jbrumley.

More From InvestorPlace

Compare Brokers

The post Tracking Fitbit Inc - Time To Put It Back on Your Watchlist appeared first on InvestorPlace .

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.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.