Maker of wearable health tracking devices Fitbit, is borrowing a leaf out of GoPro Inc (NASDAQ:GPRO)’s playbook having announced plans to raise $100 million through an initial public offering. The wearable giant is banking on the Street’s receptiveness to consumer electronics stocks seen by GoPro’s share price that has more than doubled from $24 a share on the IPO date, to the current highs of $49 a share. The company plans to go public under the ticker name FIT.
Fitbit Impressive Run
Just like GoPro Inc, Fitbit stands to be judged based on how well it performs against the growing competition in the wearable space. Apple Inc. (NASDAQ:AAPL)’s unveiling of Apple Watch could pose the biggest headwind to Fitbit’s health tracking devices as it comes with almost the same capabilities. The number of fitness wearable devices is expected to triple to more than 70 million devices by 2018, but so should competition, as more companies come up with their own devices with unique capabilities.
GoPro Inc (NASDAQ:GPRO) market cap has soared ever since it went public as it continues to tap into other areas of growth much to the excitement of Wall Street. Fitbit is also entering the IPO phase at the back of an impressive run last year where its earnings soared to $131.8 million up from $52 million the prior year. The health tracking company is betting that fitness monitoring using wearables is not a fad, but a trend that will continue.
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GoPro has already felt the full effects of competition in the camera business as more cheap models flood the market substantially eating its market share. Chinese sensation Xiaomi developing cameras with the same capabilities as GoPro’s high-end Hero 4 camera but at a relatively cheap price has been a point of concern for investors
Fitbit has already acknowledged the headwinds that competition could pose on its business especially from Apple Watch, which could substantially affect its ability to ramp up sales in the long run. Last year alone the company shipped 10.4 million units of its health tracking devices awaiting to see if it will replicate the same fate this, year as it continues to compete for market share against other wearables.
However, Fitbit will look to gain an advantage in the wearable space using its ‘paid active users’ business that allows users to subscribe for a digital trainer among other perks for $49.99 a year.