Fitbit shares tumble as Apple watch gains market share

Shares of Fitbit, the maker of popular fitness tracking devices, sank 18 per cent on Tuesday as investors worried about its ability to compete with Apple and other makers of wearable technology.

The sudden stock drop was hardly in line with the company's hopes going into this week's consumer electronics show, the International CES, in Las Vegas. Earlier on Tuesday, Fitbit introduced the Fitbit Blaze, a fitness watch priced at $US200, which will be available in March.

The device is priced below the Apple Watch, which sells for $US350 and up, depending on the features and style.

Just six months ago, Fitbit had a strong initial public offering, valuing the company at $US4.1 billion at its market debut. Its stock had been trading at nearly $US52 a share this summer, but closed at $US24.30 on Tuesday.

The threat of Apple's reach has been changing the market. According to the research firm International Data Corp, Fitbit slipped to 22 per cent market share for wearable technology in the third quarter of 2015, compared with 33 per cent in the same quarter in 2014. But Apple, which introduced its smart watch in the second quarter of 2015, had already gained 18.6 per cent of the market by the third quarter.

Robert Peck, an analyst at SunTrust Robinson Humphrey, said several factors including competitor announcements and a tepid reaction to Fitbit's new offering could have caused the market reaction.


"Over $1 billion of market cap was reduced based on these concerns, which we think is an overreaction," Mr Peck said.

Fitbit has also been involved in patent disputes with competitors, including Jawbone.

Some analysts said that in the long run, smartwatches will not cannibalise the market for fitness trackers but rather attract new consumers, especially in China and other overseas markets.

New York Times