Shinshiro International has told investors that the 50% jump in price of stock in fitness wearables technology company, Fitbit, demonstrates that, regardless of comparisons with the dotcom crash of 2000, there is still upside potential in the technology IPO market.
Fitbit, which manufactures and sells fitness activity tracking devices, made its New York Stock Exchange debut last week and opened at $30.40, a 52% premium on the offer price of $20. It raised $730 million and is now valued at $6.2 billion.
“The valuation is a fantasy and, in the fullness of time, investors are going to look back on it with incredulity,” said an Shinshiro International technology sector researcher. “Having said that, if the IPO confirms anything, it’s that, despite widespread belief that the steam was being let out of the technology IPO sector, it seems there’s still plenty of appetite and upside potential waiting to be tapped.”
Shinshiro International noted that while Fitbit had spectacularly increased its share of the activity tracker market from 59% to 85% in two short years, research showed that a third of activity tracker wearers stop using their devices within 6 months of starting.
“All but the most dedicated athletes and fitness enthusiasts tend to find the actual data these devices provide to be rather boring and lacking in context. Despite Fitbit’s best efforts, they’ve been unable to find a way to make the data ‘sexy’ for want of a better word,” explained the researcher.
Shinshiro International warns that Fitbit faces stiff competition from Apple’s recently-launched Watch which provides similar information but also offers heart-rate monitoring and the ability to send emails as well as other information at a glance.
