Fitbit Drops as Secondary Lockup Ends, Confidence Fadesby
Fitbit Inc., the maker of wearable health-tracking devices, dropped to its lowest value on the first day investors and insiders could sell their shares from a secondary offering, signaling waning confidence in the company.
The San Francisco-based company’s lockup for its Nov. 13 share sale expired on Thursday. The stock fell 6.1 percent to $13.78 at the close in New York, its lowest price since Fitbit sold shares at $20 each in its initial public offering last June. The company has lost more than half its value this year.
In the secondary offering, Fitbit sold 3 million shares instead of the 7 million it had planned. The fetched $29 a piece, lower than the $31.68 closing price a day earlier.
While Fitbit has been the leading seller of wearable fitness trackers, investors are concerned by competition from the likes of Apple Inc., Samsung Electronics Co., and Xiaomi Corp. Fitbit’s market share fell to 22 percent in the third quarter of 2015 from 33 percent a year earlier, according to IDC. In addition to rivalry from the tech giants, companies such as Fossil Group and Under Armour Inc. have developed connected fitness devices.
It would be surprising to see investors and insiders sell so quickly after the lockup expiration, considering that the IPO and secondary offering were issued at much higher prices, said Charlie Anderson, an analyst at Dougherty & Co.
“We see often it’s a short-term bottom. There’s fear surrounding it and then the shares don’t actually fall and everyone breathes a sigh of release,” said Anderson, who has the equivalent of a hold rating on Fitbit. “I would be surprised if we saw a lot of stock come out at these levels.”