Will Fitbit Inc (NYSE:FIT) New Products Return It to Profitability?

September 20, 2017, 08:51 am ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Fitbit Inc (NYSE:FIT) recently launched several new products, which might be exactly what the company needs in order to return to profitability. The new products and services include the Fitbit coach app, the aria 2 scales, and its wireless headphones known as Flyer.

The company is striving to curve a niche for itself as a health-first company with all its products tailored to meet the needs of the modern consumer keen on monitoring their health. The company also recently launched its new smartwatch known as the Ionic, which can be used by wearers to track several health indicators including blood sugar levels.

The Ionic serves an extremely competitive market segment given that consumers have many other alternatives that are mostly geared towards monitoring one’s overall health. However, the Ionic has an advantage in that it allows users not only to track common health indicators like calories burnt when exercising, but also to track many other health indicators including weight.

The range of products offered by Fitbit have the capability to sync their data such that a consumer can use the Ionic to track blood sugar levels, and the aria 2 scale to track their weight and BMI, while using the Flyer to listen to exercise programs on the coach app.

Fitbit faces stiff competition in the smartwatch segment from Apple Inc. (NASDAQ:AAPL) and other Android smartwatch manufacturers such as Garmin Ltd. (NASDAQ:GRMN) and Sony Corp (ADR) (NYSE:SNE).

The company has a major opportunity to generate recurring revenue streams from its coach app, which is offered as a subscription service at $7.99 per month, or $39.99 per year. The company can also cross sell other products to customers who purchase the Ionic; good cross sell products are the Flyer headphones.

Fitbit can also offer ancillary products through its devices by allowing third parties to sell other health related services through its applications. The smartwatch industry and the wireless headphone segment are growing at a prodigious rate such that the company can ride this growing trend to sell many of its devices.

Therefore, the question remains whether it is prudent to invest in Fitbit right now even though the company is not yet profitable.

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