FIT stock is up 24% on Monday after it emerged that Google’s parent company Alphabet Inc (NASDAQ:GOOGL) has made an offer to buy Fitbit Inc (NYSE:FIT).
Google Entering the Wearables Market
The internet giant is attempting to enter the wearable devices market, following the likes of Apple (NASDAQ:AAPL) and Samsung (OTC:SSNLF), with a bid for the San Francisco-based fitness tracker maker. While there is no certainty that the talks will lead to any concrete deal, nor is there any confirmation on how much Alphabet has offered to acquire Fitbit, which has a market cap of nearly $1.4 billion USD, FIT stock has struggled in recent months, and a takeover would make sense for both parties.
Fitbit has been a pioneer in the wearable devices craze, which has swept the market in recent months and years; however, FIT stock has been tanking in a dismal 2019 as its dominant market share is chipped away by companies offering cheaper alternatives, leading to disappointing quarterly results. In an attempt to diversify its portfolio and boost revenues, the company has been making deals and acquisitions in the healthcare market, with many analysts stating that the majority of Fitbit’s revenue is now in the health data sector.
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FIT Stock Struggling in 2019
FIT stock has dropped nearly 40% from a February peak of $6.87 to Friday’s closing price of $4.31 after the company slashed its revenue outlook in July, blaming underwhelming sales of its newest low-cost offering, the Versa Lite.
However, after sinking to an all-time low in late August, FIT shares showed signs of recovery following the launch of its latest smartwatch, the Versa 2, which included Amazon’s (NASDAQ:AMZN) voice assistant technology, Alexa. Also in August, Fitbit signed a deal with the Singaporean government to provide fitness trackers and related services to a health program that could reach up to one million users.
Fitbit will report its third-quarter earnings on November 6, the first earnings to include sales of its latest product offerings, and one that both FIT and Google investors will be keeping a keen eye on.
Featured Image: DepositPhotos © GeorgeRudy
