It’s never good news when a company projects certain milestones, sales, or revenues, and misses the mark. Investors are never kind to news such as Fitbit, Inc. (NYSE: FIT) preliminary 2016 fourth quarter financials. Fitbit is feeling the pain of missing its projected revenues, and the company is down almost 30%. FIT ended Friday, January 27 at $7.20, but started the new week down 18%. At the time of this writing, the company is trading at $5.91, and it’s continuing to fall.
FIT initially projected fourth quarter revenue to be $725-$750 million, but is prepared to officially announce the actual revenues will be $572-$580 million. In percentage terms, FIT expects annual revenue growth to be approximately 17% from the previously forecasted growth of 25% to 26%.
The problem however, isn’t just with FIT. Techcrunch sites a new report from eMarketer that despite the rhetoric, “wearable device category is failing to grow at the rates forecasted earlier…wearables like Apple Watch and Fitbit were expected to grow more than 60 percent year-over-year from 2015 to 2016. However, the firm is now cutting that estimate down to just 25 percent growth this year.”
Net Net? It’s an industry that just isn’t gaining as much traction as expected.
Despite the less than optimistic market outlook, FIT CEO James Park said, “While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA…to address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs. Looking forward, we believe Fitbit is in a unique position to stimulate new areas of demand by leveraging the data we collect to deliver a more personalized experience while developing upgraded versions of existing products and launching additional products to expand into new categories.”
Further, Park said, “We believe the evolving wearables market continues to present growth opportunities for us that we will capitalize on by investing in our core product offerings, while expanding into the smartwatch category to diversify revenue and capture share of the over $10 billion global smartwatch market.”