- Fitbit plunged to a record low after hours on Wednesday because of disappointing smartwatch sales, a day after Apple exceeded expectations.
- While Fitbit maintained the No. 2 position in smartwatches at the end of 2018, it’s slashing prices to stay competitive, leading to reduced margins.
- After its post-market drop, Fitbit is worth less than $1 billion.
On Tuesday’s earnings call, Apple CEO Tim Cook commended his company for sticking with wearables “when others perhaps didn’t.”
A day later, Fitbit CEO James Park struck a very different tone, telling investors in a press release that “we are disappointed to lower guidance for the year.”
Apple shares climbed 2.6% on Wednesday, closing at their highest mark this year. Fitbit shares closed at a record low on Wednesday and then plunged more than 15% in extended trading after the smartwatch maker’s earnings report.
It’s a tale of two companies told over the course of 24 hours. Apple is the icon of the consumer electronics business, having parlayed its dominance in smartphones into a market-leading position in watches by keeping people in its ecosystem. Fitbit is the challenger that innovated in fitness tracking and built a solid business before getting steamrolled by the industry superpower as it moved into more advanced smartwatches.
Apple’s wearable business, which includes AirPods, Apple Watch and Beats headphones, recorded 48% growth in the quarter from a year earlier to $5.53 billion and CFO Luca Maestri said the category’s growth is accelerating over 50%.
Fitbit’s sales grew only 4.8% in the quarter to $313.6 million…