Fitbit makes big run on first day of trading
Shares of Fitbit (FIT) surged in its first day of trading Thursday, as the wearable health-tracking device maker made a splash in its initial public offering.
Fitbit, which trades under the NYSE ticker FIT, opened for trading shortly after 10 a.m. ET with an opening price of $30.40 a share. The stock was up 50% from its initial price of $20 during regular trading hours.
More than 40 million shares of Fitbit were traded, putting the company on track to rank among the top-five stock market debuts of the year by deal size, according to Renaissance Capital. In after-hours trading, Fitbit was at $29.93.
Fitbit's successful IPO launch came the same day the Dow rose about 200 points, and Nasdaq broke its 15-year old all-time record high.
Fitbit Chief Financial Officer Bill Zerella said he was happy with the reception the company received on Wall Street.
"We're really excited; it's a great culmination of eight years of effort," Zerella said in a telephone interview Thursday. "With respect to the New York Stock Exchange, it is great to be associated with such an iconic brand. Partnering with (NYSE) gives us some really great opportunities."
Fitbit offers six wearable health and fitness trackers, with online dashboard and mobile apps that automatically sync with the devices.
The San Francisco-based company faces a crowded marketplace, with competition from other wearable health-trackers such as Nike+, Apple Watch and Samsung Gear. Competitor Jawbone recently sued Fitbit for allegedly poaching employees who spilled their sensitive corporate information.
Some analysts say that Fitbit faces a steady competition from the Apple Watch, which customers can now reserve for an in-store pickup.
Along with a built-in health-tracking feature, Apple Watch offers a range of additional features that connect to the iPhone, such as email and text notifications, apps, and a navigation system. Prices for the Watch range from $549 to more than $1,000.
Fitbit's product, on the other hand, exclusively focuses on health and wellness. But is comparatively much cheaper (models range from $59.95 to $249.95) and has a longer battery life.
Charlie Anderson, senior research analyst at Dougherty & Company, said Fitbit's exclusive focus on health tracking will work to its advantage over Apple Watch over the short term.
"Everything seems to be in Fitbit's favor — its a new category, and retailers love to sell it," Anderson said. "But in two to three years from now, when Apple figures out the battery issues with the Watch ... (Fitbit) will need to do things better than Apple, and pivot into markets that Apple won't."
"The good news is that now Fitbit has a lot more money to do so," he said.
As Fitbit entered public trading, it has frequently been compared to BlackBerry — which was an established market leader almost a decade ago, but then fell short when it failed to meet innovative expectations of the time.
Zerella said Fitbit plans to avoid BlackBerry's fate by keeping an "intense focus on innovation."
"We're aggressive in terms of how we can deliver new technology that will allow us to stay ahead of the competition," Zerella said.
The company initially filed to go public in May, noting that it is an 'emerging growth company,' and investing in its Class A common stock involves certain risk factors .
On Wednesday, the fitness company set its initial stock price at $20 — giving the company a potential $4.1 billion value at its initial public offering. Fitbit originally set its share price from $14 to $16, but increased the share price range by $3 in a regulatory filing Tuesday.
In the most recent calendar year, Fitbit recorded about $100 million in net income on $745 million in revenue.