Fitbit Set to File for an IPO

Fitbit, manufacturer of fitness trackers and scales, is planning to go public, with an IPO valuing the company at $100 million. As the leader in this segment, Fitbit sold nearly 11 million devices last year, with revenue of $745 million.

They are certainly the market leader, with more than 2/3 of the fitness tracker market. But Fitbit’s timing is odd. Could it be because the Apple Watch is on the market? While not that many Apple Watches are shipping, Fitbit might have their IPO before there are enough to be a threat.

As Wall Street Journal technology columnist Christopher Mims said on Twitter, “42% of people stop wearing fitness trackers after 6 months. Any growth left for FitBit is just people who haven’t tried, discarded it yet.” So this isn’t a market where you develop long-term relationships with a lot of your customers.

But for those interested in tracking their fitness, Fitbit devices are much cheaper than the Apple Watch, competitive with other brands, and they offer a full range of trackers, from the One, which goes on your belt clip, to the Surge, which is similar to a watch. But some of Fitbit’s products are very inaccurate, prompting people to return them, or dump them.

Personally, I’ve used a Fitbit One for about two and a half years. It’s the most accurate device the company makes, and is unobtrusive. Dedicated runners and fitness buffs may want more, such as the Fitbit Surge HR, which measures their heart rate along with their activity, but the Apple Watch, while priced a bit higher, offers so much more functionality that it’s hard to imagine this cohort not buying the Apple product, once it becomes more widely available.

While Fitbit may be able to retain some of their market share, I think investing in this stock would be quite risky. Wearables are not a given, and with Apple in the market, it will be hard for any company to create products that compete.