So much for the holiday bump for Fitbit shares.
After seeing a huge boost following the holiday shopping season — when the app topped the App Store, indicating that the device seemed to be a popular gift — Fitbit shares tumbled more than 18 percent in trading today. Previously, Fitbit had gained 38 percent on the year after going public in 2015, and bumped an extra 5 percent after topping the App Store.
The likely culprit? The company is getting into the smartwatch market with a new fitness-oriented smartwatch the company unveiled at CES today. After the announcement, shares fell throughout the day before ending down 18 percent.
The Fitbit Blaze, starting at around $200, represents not only new competition with smartwatch makers, but also potentially a lack of focus for the company — which investors may be punishing. Fitbit had carved out a strong niche in the fitness tracking market, setting itself up for one of the strongest stock performances from companies that went public last year.
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That’s an area where not only smartwatch makers like Apple and Pebble reside, but also one that is seeing new entries from companies like Fossil. That watchmaker recently bought Misfit for $260 million in order to carve a path into the smartwatch market.Time will tell whether the company will be able to be competitive in the smartwatch market, but for now, investors seem to be showing a complete lack of confidence in the company’s new interest in the smartwatch market.