As sales of Fitbit fitness trackers increase, a wave of optimistic, device-clad people are trying to become as healthy as possible.
And so is the company.
Fitbit officially went public Thursday with an initial public offering of stock, priced at $20 a share. It opened at about $30 and closed at $29.68. Fitbit sold 36.6 million shares, bringing the company’s market value to $4.1 billion. The IPO was the third largest in the United States this year, the Wall Street Journal reported.
Fitbit’s devices, worn on the wrist or on clothing, track steps, calories burned, heart rate and other indicators of health — and the company believes the products accommodate consumer trends toward healthier living. Some customers pay for a subscription that provides even more data.
In its IPO prospectus, Fitibit said both individuals and employers are becoming more interested in fitness, and it shows in their numbers. The company has seen significant revenue growth since 2011, taking in $131.8 million in profit last year. Total device sales have also escalated, more than doubling between 2013 and 2014, the prospectus shows.
Not only that, but use of fitness trackers in general are on the rise: One study shows one in ten Americans over 18 own a tracker, and an estimated 13 million devices will be used in employee-fitness programs by 2018, Benefits Pro reported.
The company is also confident in the future, writing that their products will thrive as mobile devices become increasingly more popular. With nearly 70 percent of the fitness tracker market in 2014, Fitbit is ahead of competitors like Jawbone and Garmin, Forbes reported. Not only that, but it has the endorsement of some big names — see President Obama pictured below sporting one of their bracelets.
Still, not everyone is convinced.
The word that won’t go away for Fitbit is “fad.” Tim Mullaney wrote in Market Watch Thursday that “the product is a toy, and a fad, and maybe a fashion statement. And betting on that to last is a bad idea.”
Fitbit skeptics wonder how may of the devices are on shelves collecting dust. Not only that, but competitors like Apple’s smart watch might cause trouble for the company moving forward.
Additionally, Fitbit’s ascent hasn’t been without bumps. Rival Jawbone has put Fitbit in the middle of two lawsuits this year — first for stealing employees and intellectual property, and then again for infringing patents. Fitbit also recalled one of their products after people complained the wristbands caused rashes and irritation.
So, there’s plenty of reason for Fitbit to celebrate, but, just as anyone trying to get fit knows, it takes a lot to stay in shape.
“It’s become the generic for a tracking device,” Ed Maguire, senior analyst with CLSA Americas told the Wall Street Journal. But Blackberry was once generic for hand-held devices, and it’s been struggling as a company for years.
Will people get bored with their Fitbits once the thrill is gone?
“If you go out and walk your dog with a Fitbit and it falls off, you’re not going to retrace your steps,” Maguire told the Journal. “Fitbit is very easy to lose, and they are priced at a level where you don’t feel bad if you lose it, but you also don’t feel like replacing it.”