Why Fitbit Stock Rose 15.4% in September

What happened

Shares of Fitbit (NYSE: FIT) climbed 15.4% in September, according to data from S&P Global Market Intelligence. The jump in the company's share price can mostly be attributed to optimism surrounding the unveiling and launch of its Ionic smartwatch line.

So what

Fitbit unveiled the Ionic smartwatch on Aug. 28, highlighting features including a four-day battery life, new health-tracking technologies, and contactless payments. Fitbit also announced a partnership with DexCom to bring glucose-monitoring technology to the Ionic line of watches. The Ionic is an important step for the company as it attempts to expand beyond activity trackers and get a bigger foothold in the broader wearables market.

Fitbit stock also got a lift following a Sept. 26 announcement that the company was one of nine that had been approved for a Food and Drug Administration program that will ease the regulatory approval measures for health and wellness apps, thereby speeding development processes. Faster development timelines could be significant as the company looks to build on the health and wellness functionality of its devices and develop an app ecosystem for its smartwatches.

Now what

The Ionic smartwatch went on sale Oct. 1 at a retail price of $300. Rather than opt to use a third-party operating system such as Alphabet's Android, Fitbit has developed its own operating system for its smartwatches. This move gives the company greater control over the hardware platform, however it also means that there will be fewer apps available for the devices, which could ultimately impact consumer adoption.

Fitbit's sales have slipped by double digits in each of the last three quarters, and the company expects that revenue for the year will be down between 22% and 29% despite Ionic's fourth-quarter launch. The smartwatch will likely be the deciding factor in whether Fitbit can return to growth next year, so investors should keep a close eye on its performance.

10 stocks we like better than FitbitWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Fitbit wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GOOGL, GOOG, and Fitbit. The Motley Fool has a disclosure policy.