24/7 Wall St.

Wall St. continues to walk away from Fitbit (NYSE: FIT) as it becomes clearer and clearer that it has absolutely no future, perhaps even as part of another company. On the back of poor earnings over time, its shares are down 64% in the last two years, and 18% this year.

Fitbit’s first quarter revenue dropped from $299 million last year to $248 million. Its net loss per share was $.34 compared to last year’s loss of $.27. Guidance was poor enough to make investors scurry away from the shares. Fitbit has over $500 million in cash and securities on its books. Its market cap is less than $1.2 billion. Its value based on its operating results is small

Fitbit’s products have very few exclusive features, and are expensive for many consumers. The Fitbit Ionic Watch costs $249, for example. The Apple Watch Series 1  costs exactly the same. What consumer would not buy the Apple product with Apple’s reputation for quality and its wildly strong brand and brand recognition?

Fitbit management needs a buyer for the company, because its revenue is shrinking fast enough so that it will disappear into consumer tech oblivion. Why will any outside corporation want to catch a falling knife. Almost certainly none.

When Fitbit announced earnings, James Park, co-founder and CEO, said:

“We made important progress in the transformation of our business in the first quarter as we continue to adapt to the changing wearables market. Early sell through of Fitbit Versa, our first true mass appeal smartwatch, has been the best in our company’s history, positioning us to expand our user base and capture greater share of the fast-growing smartwatch market. We continued to deepen our relationship with our users, investing in software and services that deliver on our promise of helping people achieve better health outcomes. To this end, we closed the acquisition of Twine Health and, most recently announced a long-term collaboration with Google that will accelerate innovation in digital health and wearables.”

Adapting to a changing market means Fitbit has to catch up, and it too far behind to do so.