Why Fitbit Shares Got Crushed Today

By Markets Fool.com

What: Shares of activity tracker maker Fitbit got crushed today, down by 19% as of 11:50 a.m. ET, after the company reported fourth-quarter earnings that beat expectations but issued soft guidance.

Continue Reading Below

So what: Revenue in the fourth quarter came in at $711.6 million, nearly doubling from a year ago. On an adjusted basis, that translated into non-GAAP net income of $43.8 million, or $0.35 per share. Both top- and bottom-line results easily slid past Wall Street's expectations of $649 million in sales and $0.25 per share in adjusted profit. Fitbit sold 8.1 million devices during the quarter, and CEO James Park said this year is starting with strong customer engagement and retention.

Now what: Guidance was the real kicker here. Following the busy holiday shopping season, results are expected to fall due to seasonal factors, but it's worse than expected. First-quarter revenue is expected in the range of $420 million to $440 million, and non-GAAP earnings per share should be $0.00 to $0.02. Analysts were modeling for $484 million in revenue and $0.23 per share in adjusted profit for the current quarter. Fitbit said it expects to spend heavily on sales and marketing related to the newest Blaze and Alta products, which will squeeze profitability.

The article Why Fitbit Shares Got Crushed Today originally appeared on Fool.com.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.