Fitbit Jumps in Trading Debut After Larger Than Expected IPO
Fitbit Inc. surged in its trading debut, after heavy demand for the companys initial public offering led it to boost the size of the deal.
Fitbit Inc. surged in its trading debut, after heavy demand for the companys initial public offering led it to boost the size of the deal.
The shares rose 51 percent to $30.27 as of 11:36 a.m. in New York. Fitbit and some of its backers raised $732 million after selling the stock for $20 apiece.
The San Francisco-based companys appeal lies in its strong position in the fast growing market for wearable technology, in this case fitness trackers that can monitor everything from heart rate to sleep patterns. Fitbit is profitable -- making it a standout among recent technology IPOs -- with sales that nearly tripled last year.
Fitbits devices range in price from the $59.95 clip-on Zip that tracks steps and distance to the $249.95 Surge, which includes a heart rate monitor. For these, the company faces a range of competition from Apple Inc.s smartwatches to Xiaomi Corp.s lower priced monitors. One way it plans to stay ahead is by spending more on research and development, Chief Executive Officer James Park said in an interview on Bloomberg Television.
This year were tripling R&D spend -- most of it is in software but we do continue to innovate in hardware, he said. Its all about making fitness very fun and engaging. Were investing a lot in software R&D to make that happen.
Relative Value
Another rival, Jawbone Inc., is suing Fitbit, alleging it infringed on patents, stole employees and plundered trade secrets. Park said he couldnt comment on legal strategy.
Fitbit also needs to keep its current users active. A third of smartwatch and activity-tracker owners abandon their device after six months of use, according to a survey of 1,700 consumers by consulting firm Endeavour Partners in July 2014. Fitbit said it had 9.5 million paid active users as of March 31 after selling 20.8 million devices since 2011.
Investor demand for Fitbits shares has been evident since early this week. On Tuesday it boosted the price range and size of the offering. A day later it said it had sold even more shares than expected, above the $17 to $19 range, raising about $254 million more than it had initially set out to.
At its opening price Thursday, Fitbit was valued at about $6.15 billion, or about 8.2 times 2014 sales. Thats more than twice the average multiple fetched by GoPro Inc., which makes wearable cameras, and Garmin Ltd., which makes activity trackers and GPS devices.
Fitbit offered Class A shares through the IPO, which have one vote per share. Class B shares are held by insiders and represent 98 percent of the voting power, with 10 votes each. Its biggest stockholders prior to the IPO include Foundry Group, True Ventures and SoftBank Corp.
Morgan Stanley, Deutsche Bank AG and Bank of America Corp. managed the offering. The shares are listed on the New York Stock Exchange under the symbol FIT.
The shares rose 51 percent to $30.27 as of 11:36 a.m. in New York. Fitbit and some of its backers raised $732 million after selling the stock for $20 apiece.
The San Francisco-based companys appeal lies in its strong position in the fast growing market for wearable technology, in this case fitness trackers that can monitor everything from heart rate to sleep patterns. Fitbit is profitable -- making it a standout among recent technology IPOs -- with sales that nearly tripled last year.
Fitbits devices range in price from the $59.95 clip-on Zip that tracks steps and distance to the $249.95 Surge, which includes a heart rate monitor. For these, the company faces a range of competition from Apple Inc.s smartwatches to Xiaomi Corp.s lower priced monitors. One way it plans to stay ahead is by spending more on research and development, Chief Executive Officer James Park said in an interview on Bloomberg Television.
This year were tripling R&D spend -- most of it is in software but we do continue to innovate in hardware, he said. Its all about making fitness very fun and engaging. Were investing a lot in software R&D to make that happen.
Relative Value
Another rival, Jawbone Inc., is suing Fitbit, alleging it infringed on patents, stole employees and plundered trade secrets. Park said he couldnt comment on legal strategy.
Fitbit also needs to keep its current users active. A third of smartwatch and activity-tracker owners abandon their device after six months of use, according to a survey of 1,700 consumers by consulting firm Endeavour Partners in July 2014. Fitbit said it had 9.5 million paid active users as of March 31 after selling 20.8 million devices since 2011.
Investor demand for Fitbits shares has been evident since early this week. On Tuesday it boosted the price range and size of the offering. A day later it said it had sold even more shares than expected, above the $17 to $19 range, raising about $254 million more than it had initially set out to.
At its opening price Thursday, Fitbit was valued at about $6.15 billion, or about 8.2 times 2014 sales. Thats more than twice the average multiple fetched by GoPro Inc., which makes wearable cameras, and Garmin Ltd., which makes activity trackers and GPS devices.
Fitbit offered Class A shares through the IPO, which have one vote per share. Class B shares are held by insiders and represent 98 percent of the voting power, with 10 votes each. Its biggest stockholders prior to the IPO include Foundry Group, True Ventures and SoftBank Corp.
Morgan Stanley, Deutsche Bank AG and Bank of America Corp. managed the offering. The shares are listed on the New York Stock Exchange under the symbol FIT.
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