Fitbit Just Saw its Shares go Under $3 for the First Time

Activity tracker maker Fitbit saw its shares hit under $3 for the first time on Thursday. The company has seen its shares drop for weeks after a disappointing financial outlook.

Shares have fallen 42% this year so far and have shed over 30% just in August.

It was at the end of July that the company cut its full-year forecast and said its new Versa Lite smartwatch isn’t selling as well as expected.

For the third quarter, Fitbit said revenue will fall 10% to 15% from a year ago to $335 million to $355 million with a non-GAAP loss between 11 cents a share and 9 cents a share. Wall Street analysts had been expecting third quarter revenue of $399.4 million with a non-GAAP profit of 2 cents a share.

CEO James Park said on the July 31st earnings call, “In Q2, we made progress transforming our business and generated revenue of $314 million, up 5%. However, our sales mix was different than we anticipated. Versa Lite sales did not meet our expectations, leading to a contraction in quarterly smartwatch revenue growth.”

He added, “We subsequently reduced our Versa Lite sales expectations for the remainder of the year and are lowering our full-year 2019 revenue gross margin guidance. We attribute the Versa weakness to our pricing go-to-market strategy. We added Versa Lite to our product lineup in Q1.”

“The intention of lowering the barrier to entry for consumers to purchase a quality smartwatch with certain core features and shifted to an everyday low pricing strategy from a promotional. This resulted in lower promotional dollars spent the less outfit. While Versa Lite received good press in consumer reviews, we saw that consumers are willing to pay more for smartwatch with additional features or look for discounting versus everyday value,” said Park.

He continued, “All of this said, we believe that Fitbit brand remains strong. Versa sales exceeded our expectation, benefiting from the trade-up scenario that I mentioned earlier where consumers are willing to pay more for more features. Tracker sales accelerated in the quarter, growing 51% to $186 million. And using the last four weeks of sales through July 20 in the U.S. as a proxy, Fitbit had four out of the five top spots in the wearables category where Versa smartwatch outsold each Samsung and Garmin. We feel confident. We are taking the steps needed to ensure what happened with Versa Lite has not happened again and that we reduced the sales impact for the single product.”

Disclaimer: We have no position in Fitbit Inc. (NYSE: FIT) and have not been compensated for this article.