Market Overview

How Did Wearables Do In Q4?

How Did Wearables Do In Q4?

Shares of Fitbit Inc (NYSE: FIT) continue flirting with its all-time lows after the company pre-announced its fourth-quarter results in late January.

After Wednesday's market close, Fitbit released its official results, and as expected, it consisted of a loss and revenue miss. Specifically, the maker of wearable fitness tracking devices lost $0.56 per share in the fourth quarter while revenue fell to $573.8 million from $711.6 million a year ago.

Wall Street analysts were expecting Fitbit to lose $0.50 per share on revenue of $576 million in the quarter.

Related Link: Fitbit Sold 6.5 Million Devices In Q4 Despite Earnings Miss

Fitbit's stock was trading lower by more than 1 percent ahead of Thursday's market open at $5.80 — well within striking distance of the all-time lows of $5.62.

The question fresh on investors mind is Fitbit's woes company specific or indicative of a wider slowdown in the wearable market. To answer this we can take a look at a competitor of Fitbit, Garmin Ltd. (NASDAQ: GRMN).

Garmin Q4 In Review

Garmin, known primarily for being a pioneer in GPS products, looked for new venues of growth once GPS capabilities became a standard feature in nearly every smartphone. The company quickly gained a reputation in the wearable segment but still trailed Fitbit in market share as of the end of 2016.

But Garmin's fourth-quarter report Wednesday shows its wearable segment is doing just fine.

As a whole, the company reported that it earned $0.73 per share in the fourth quarter on revenue of $861 million. This compares to the $0.57 per share and $793 million in revenue analysts were expecting.

By segment, Fitness sales rose 20 percent from a year ago to $274.052 million and were driven by Garmin's Elevate wrist heart rate technology. The company also cited a strong reception from the vívofit jr by customers during the holiday season and the device, which is sold to children has strong growth potentials.

In fact, Garmin also stated that the fitness segment will be its largest revenue contributor in 2017.

Bottom Line

Garmin's stock gained 7 percent on Wednesday after its earnings report as the company made it clear its wearable segment is doing just fine. By contrast, investors already knew Fitbit's business was in decline based on its pre-announcement that even caught some Wall Street analysts off guard.

Needless to say, this explains why shares of Fitbit are lower by around 20 percent since the start of the year and lower by more than 60 percent over the past year. By contrast, Garmin's stock is higher by 11 percent since the start of 2017 and higher by around 35 percent over the past year.


Watch the below clip, during which the Benzinga team explores the state of the wearable market.


Related Articles (FIT + GRMN)

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