Fitbit shares tanked amidst sluggish Versa Lite sales

Fitbit has reduced its predictions for revenue in 2019, blaming slower-than-expected sales of the Versa Lite. As a result of the news, the price of the company’s shares fell to an all-time low, falling as much as 21 percent.

Fitbit debuted the Versa Lite back in March. This is a more affordable version of the company’s widely used smartwatch. The original and the simplified version are virtually indistinguishable in appearance. However, it does not include Wi-Fi, storage for music, an altimeter that counts floors, swim tracking, or NFC that allows for payments. The reduced price was intended to encourage increased sales, which Fitbit hoped would result.

However, it does not appear that this was the case at all.

During yesterday’s earnings call, Chief Executive Officer James Park stated that consumers were willing to pay more for a smartwatch with additional features or look for discounts rather than everyday value. Although the Versa Lite has received positive reviews from customers at present, we found that customers are willing to pay more for a smartwatch with additional features.

The most recent quarterly report from Fitbit revealed revenue of $314 billion, an increase of 5% compared to the same period in the previous year. The increase lagged behind the 31 percent increase in the number of devices sold, owing primarily to slower sales of smartwatches.Compared to the previous year, trackers brought in 51% more money, while sales of more complicated devices went down by 27%.

The average selling price was another factor that Versa Lite considered. The average price of $86 per gadget fell 19% year on year in the second quarter.According to the company, the trend of more devices being sold at a reduced cost per device is one that is expected to continue in the months to come.

Even more concerning is the fact that Fitbit has lowered its revenue outlook for 2019. The San Francisco-based company anticipates third-quarter sales of $335 million to $355 million, representing a more than 10% decrease year over year.In comparison to its previous projections of $1.52 billion to $1.58 billion in sales for the whole year, analysts now anticipate a figure that is somewhere in the range of $1.43 billion to $1.48 billion.

It shouldn’t come as a surprise that shares of Fitbit plummeted in response to the news. They experienced a drop of up to 21 percent immediately after the earnings call but have since recovered, with approximately 5 percent in trading conducted after regular business hours. As a result, they are still 17 percent lower than they were at the start of the year.

Just one day before Fitbit’s disclosure, Apple said that its revenue for the previous three months came in at $53.8 billion, marking the company’s biggest ever June quarter. The growth was driven mostly by increases in service offerings and wearable technology, which saw increases of 13% and 48%, respectively.

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