Fitbit goes IPO

Juniper Research analysts estimate that global retail revenue from smart wearable devices will triple by 2016, and will reach $ 53.2 billion by 2019, compared with $ 4.5 billion in 2014. Over the next five years, the growth of the market will be driven by the growth in sales of premium smart watches and smart glasses.

Tomorrow, June 18, the initial placement of FitBit, one of the market leaders in fitness devices for an active lifestyle and other wearable electronics, will take place.

According to the latest information, Fitbit increased the volume and price of the sale of shares as part of the initial public offering (IPO).

The company plans to place 34.5 million Class A securities worth from $ 17 to $ 19 each (previously, the company planned placement in the range of $ 14–16). If the IPO passes along the upper price line, Fitbit will attract more than $ 750 million and will be valued at $ 3.7 billion. Given some market rush, it will not be a surprise if the price range is removed before Thursday begins. Shares of the company will be traded on the New York Stock Exchange under the ticker "FIT" . Underwriters at the planned public offering are Morgan Stanley, Deutsche Bank, Bank of Amercia / Merrill Lynch, Barclays, Piper Jaffray, SunTrust Robinson Humphrey, Raymond James, Stifel and William Blair.

Fitbit was founded in 2007 by Harvard and Yale graduates by James Park and Eric Friedman.

After the initial placement, the company plans to continue to invest heavily in further research and development to strengthen its product line. In addition, it is planned to expand the company's activities at the expense of the corporate segment, interaction with employers and fitness centers.
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The successful development of the company and the wearable device market in general makes it possible not to doubt the prospects, but the reverse side is that this success attracts a lot of attention from competitors. For example, Apple introduced some features of Fitbit devices into its smartwatch, considering the power of Apple, a young company should exercise some caution. In addition, you can not discount Jawbone, which recently filed two lawsuits against Fitbit.

Financial performance

A look at the results of the first quarter shows a growth in the company's revenue by 210% to $ 336.8 million, with a significant increase in the number of sales by 3.9 million from 1.6 million in the same period last year. And in the US, revenue increased to $ 175.5 million, and on the international market to $ 52.4 million.

Fitbit costs have also increased dramatically. In particular, marketing expenses increased by 289% to $ 43.9 million, and research and development by 147% to $ 22.4 million. However, revenue growth compensates for high costs, which translates into $ 89.9 million in operating profit, which is 469 % growth for the year.

Conclusion

In general, it is possible to draw conclusions about the likely successful placement. Significant revenue growth seems to be the most obvious positive factor in favor of the company. Plus, add a reasonable planned stock price and the overall growth of the wearable device market. During the IPO, significant price jumps are likely. The predicted price by the end of the first trading day is $ 35- $ 38, although it goes without saying that I may be wrong.