Fitbit plummets after reporting weak sales of its Apple Watch competitor
- Fitbit released second-quarter earnings Wednesday that showed weak sales of its Versa Lite smartwatch.
- The company lowered its yearly guidance on the poor sales numbers of the device, a main competitor to the Apple Watch.
- Shares fell more than 20% on the news.
- Watch Fitbit trade live on Markets Insider.
Fitbit is struggling to compete with the likes of Apple, even though it offers similar products at a lower price point.
Shares of the company plummeted as much as 23% Thursday after the company lowered its guidance for the next quarter despite beating analyst expectations of earnings per share and revenue.
The lowered expectations were because of poor sales of the company's Versa Lite smartwatch, one of its main competitors against Apple products.
"With weaker Versa Lite sales, we are lowering the midpoint of our 2019 revenue guidance by $95 million to $1.455 billion from $1.550 billion and now expect full year 2019 revenue to be $1.43 billion to $1.48 billion," said the company in its earnings release.
CEO and co-founder James Park said in a press release that the company was disappointed in the lower guidance for the year, but "remain confident in our long-term transformation strategy."
Fitbit reported adjusted loss-per-share of $0.14 and revenue of $314 million, where analysts expected a loss of $0.18 per share and $312 in revenue.
Sales of the Versa Lite smartwatch dipped 27% over the year, and made up 38% of the company's total revenue in the quarter. The company now expects that in the third quarter, revenue will decline 15% to 10% on the year. That amounts to a loss of between $335 million and $355 million. Even though the company hopes to sell more devices in the next year, declining average selling price will lead to losses.
Competition in the wearables space is heating up. Even though the Versa Lite is less expensive than the Apple Watch, it's had trouble winning over consumers. The Fitbit watches lack some of the features that other smartwatches have, such as voice support and digital assistants, according to Business Insider's Lisa Eadicicco.
And while Fitbit has been focused in on health initiatives such as how its devices can be used to address conditions such as atrial fibrillation and sleep apnea, so have others. In July, Apple announced that it would upgrade iOS 13 to make it a better health tracker that will be used in new health features in its iPhone health app. Tim Cook, Apple's CEO said that improving people's health will be Apple's greatest contribution to mankind.
Fitbit shares are down more than 30% year-to-date.