Fitbit: IPO Filing A Desperate Move In Fear Of Apple Watch?
On Thursday, May 7, 2015, Fitbit filed for a $100 million IPO, reported Venture Beat.
Fitbit Inc. Proposes to use the ticker symbol “FIT” when its shares are listed on the New York Stock Exchange, CBS News reported. Not only did the IPO filing come as a surprise to many commentators, it also allowed the first public look into the eight-year-old company’s financials. Cory Johnson from Bloomberg admitted to being shocked by Fitbit’s financial status.
Fitbit filing a sucker IPO before Apple Watch puts it out of business?
— Matt Yglesias (@mattyglesias) May 7, 2015
“If you take out the stock compensation charges, these guys hit $191 million in profit last year at a 26% EBITDA margin. I’m completely shocked by this.”
The financial documents included with the IPO filing showed that Fitbit is going from strength to strength and is showing little sign of slowing down even with the recent launch of the Apple Watch. In fact, sales from Q1 2014 to Q1 2015 increased 144 percent, and Fitbit’s revenue is predicted to exceed $1 billion in 2015.
Even President Barack Obama has been seen wearing a Fitbit Surge on his left wrist.
The business and financial world are divided on Fitbit’s reasoning behind their sudden IPO filing request. Some commentators speculate that Fitbit’s IPO filing is a last-ditch attempt to maintain market share for fear that it will soon be crushed by the increasing popularity of the newly launched Apple Watch. They are drawing comparisons to the launch of the iPod, which single-handedly obliterated the then well-established MP3 player industry. The speculation is that Fitbit will need all the cash it can get from IPO in order to go to battle with Apple, arguably the most valuable and powerful company on the planet.
Others take a different view. Wes Henderek, from the market research analysis company NPD Group, confirmed that Fitbit is the most dominant player in the fitness tracker category of the wearable technology market, and that the timing of the IPO filing is so that Fitbit can continue to grow at its current speed in order to ensure that Apple Watch does not become a threat. In the section of the IPO filing application forms under “risk factors,” Fitbit appears to have downplayed the potential weight of Apple as a competitor in their niche market, reported Venture Beat.
“Many large, broad-based consumer electronics companies either compete in our market or adjacent markets or have announced plans to do so, including Apple… We expect competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that are potentially more competitive than our products and services.”
Henderek agrees, noting that Fitbit has reached the stage where consumers will ask for it by name rather than simply choosing a Fitbit after a strict comparison of its features with competitor fitness wearables.
“Fitbit has tremendous brand equity.”
But isn’t Apple already the untouchable leader in the brand equity stakes?
ICYMI: @Boris will buy ANYTHING Apple sells http://t.co/BuCTvJimJe pic.twitter.com/98ycPLZWA3
— The Next Web (@TheNextWeb) May 2, 2015
