Today has been quite the day for those interested in computer hardware stocks. On Thursday, August 3, Fitbit Inc. (NYSE:$FIT) shares rallied roughly 15%. Why? It’s all thanks to the San Francisco-based company’s better-than-expected Q2 earnings. Scratch that – it’s thanks to the earnings and the fact that the company’s smartwatch will be sent out to stores in time for a critical selling period.
“With channel inventory now at manageable levels (8-12 weeks), we believe FIT is positioned to participate with industry growth (18% according to IDC in 1Q2017),” Scott Searle of Benchmark said. “Importantly, the company provided the initial timeline for its smartwatch introduction which is expected in time for the holiday season.”
It’s fair to say the fitness-tracking device maker’s fortunes have waxed and waned a bit since first going public back in June of 2015. The reason? Demand for the company’s devices has fluctuated significantly. According to experts, the fluctuation is because trackers have failed to create a position in the market as a must-have item, rather than a fashion accessory that comes and goes.
The FIT stock is trading just below $6, which is well below its initial public offering price of $20. Fitbit reported its first quarterly loss in Q4 after slow-moving holiday sales, and has not returned to profitability since.
Quick Recap: Fitbit’s earnings report
On Wednesday, the company posted a Q2 loss of $58.2 million (25 cents a share) after net income of $6.3 million (3 cents a share) in the 2016 period. Further, the adjusted loss was 8 cents a share, which is narrower than the FactSet consensus of 15 cents.
Additionally, revenue dropped to $353.3 million from $586.5 million in the 2016 period. However, it was ahead of the $341.6 million FactSet consensus.
In regards to the third quarter, Fitbit forecasts a loss, of roughly 5 cents to 2 cents a share on revenue in between the range of $380 million to $400 million. On the other side of the equation, analysts expect a loss of 5 cents a share on revenue of $393.1 million.
“Consumer demand in the second quarter was better than anticipated, enabling Fitbit to reduce channel inventory and generate better sales,” CEO James Park said. He added, “Our smartwatch, which we believe will deliver the best health and fitness experience in the category, is on track for delivery ahead of the holiday season and will drive a strong second half of the year.”
Featured Image: twitter
