Fitbit Falls 13% And Citi Still Says 'Sell'

Fitbit Inc FIT said it lost 2 cents per share on revenue of $570.8 million. Both of these metrics fell short of expectations, which sent shares to a new all-time low and at least one Wall Street analyst sees further downside ahead.

The Analyst

Citi's Stanley Kovler maintains a Sell/High Risk rating on Fitbit's stock with a price target lowered from $5 to $4.50.

The Thesis

Fitbit's top-and-bottom-line weren't the only metrics short of expectations as average selling price (ASP) did increase 20 percent to $102 per device, but was still short of the $108 per device expected, Kovler said in a note. The company "needed" to offer discounts to increase its sales. Sales of new products accounted for 36 percent of revenue, which implies its fashion-focused Ionic watch sold "just" 300,000 units in the quarter

The company's full fiscal year 2018 guidance came in "well below" expectations and the first quarter look was also "weak." As such, Kovler said Fitbit is unlikely to break even on the P&L line in 2018 even though management's guided to a break even free cash flow and expects to save money related to capex and working capital.

Price Action

Shares of Fitbit were trading lower by more than 13 percent at $4.80, which is below the stock's all-time low of $4.90.

Related Links:

Stifel's Bearish Stance On Fitbit No Longer Applies, But Concerns Remain

How Fitbit's New Ionic Stacks Up Against The Apple Watch Series 3

Image Credit: Raysonho @ Open Grid Scheduler / Grid Engine (Own work) [CC0], via Wikimedia Commons