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Fitbit Surges in Market Debut

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Fitbit Surges in Market Debut

June 19 2015, 01.30am GMT


IPO publicity hype or a genuinely amazing new stock, Fitbit opened 52% above their IPO price on the first day of trading, putting them in the top ten stock market debuts for this year.

This came after the stock opened at $30.40 on the New York Stock Exchange. 

Fitbit, manufactures of a range of wearable accessories that keep the user constantly updated on various fitness and health related statistics, priced its IPO at $20 per share on Wednesday, a day after it had increased its IPO price range from $15 to $19.

With the price closing at $29.93 after its first full day of trading, more than 40 million Fitbit shares had changed hands.

This compares very favorably with data storage firm Box, which saw 42.6 million shares traded on its debut trading day.

The company, currently valued at $4.1 billion, is very popular with investors because it is actually profitable. Early investors in Fitbit, going back to its days as a startup, have seen a massive improvement in their financial health since the listing, with original investments growing by as much as a thousand times. Interestingly, SoftTech invested $125,000 in 2008, for a stake that is now worth $124 million.

Despite growing competition from the likes of Apple, Garmin and Jawbone, all fighting for a share of the lucrative $200 billion in consumer spending on health and fitness, Fitbit CEO James Park is very positive. Speaking on CNBC’s “Squawk on the Street”, prior to the IPO, Park he said he believes that Fitbit can continue being competitive while Apple and the other industry players ramp up their marketing efforts.

Park told CNBC that Fitbit’s brand is recognized for its strong link to health and fitness tracking. As a result, the company feels that they already have “significant competitive differentiators in the market”. Added to this, Park claims that Fitbit controls 85% of the wearable fitness market with the brand more widely searched on Google than the likes of Adidas, Lululemon, Under Armour, and Garmin.

JMP Securities analyst Alex Gauna noted on CNBC that the Apple Watch had not “come out of the gates blazing” and that Fitbit should maintain its first mover advantage for at least the next two years.  Gauna added that Apple is not comparable with the products of Fitbit in terms of price, battery life, or integrated GPS, which provides Fitbit with a lot of room to grow over the next couple of years.

Gauna also feels that Fitbit, which integrates with both Apple and Android mobile operating systems, is very well positioned, provided it continues with innovation beyond its fairly limited product range.

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