Fitbit Goes Public Amid Lawsuits and Growing Competition

Fitness device-maker Fitbit (NYSE:FIT) raised $732 million in its IPO, after pricing at $20 per share, giving the company a market value of over $4 billion. The company begins trading on the New York Stock Exchange (NYSE:ICE) on Thursday. A leader in a growing industry, investors will be watching Fitbit as an indicator for the emerging "wearable tech" category.

Garnering 68% of the market share for U.S. activity trackers last year, according to The NPD Group, San Francisco-based Fitbit is well-positioned in the current competitive landscape, which includes Jawbone and Garmin (NASDAQ:GRMN). And with revenue of $745.4 million in 2014, a 175% increase from last year, the eight-year-old company has shown significant momentum in recent years.

Unlike many venture-backed companies entering the public markets, Fitbit is profitable. The company posted $132 million in net income last year, a staggering increase over the $52 million net loss from the year prior.

"Fitbit is one of the more impressive companies we've analyzed in the past few years, from a financial perspective," said Brian Hamilton, Chairman of Sageworks.  "They've seen two straight years of explosive sales growth."

But with the recent release of smartwatches like Apple Watch (NASDAQ:AAPL), some are wondering if Fitbit will continue its fast-paced growth. Watches from Apple, Android (NASDAQ:GOOGL) and Pebble can do most of what the Fitbit can do, plus more.

Fitbit acknowledges that it is in a "highly competitive market," and the proceeds from the IPO can help the company finance its growth. "While Apple Watch is not a direct competitor, Fitbit wants to get ready to build up their balance sheet so they can play defense and hopefully a little bit of offense," said Atish Davda, CEO at EquityZen.

Fitbit will also need the capital to fight off lawsuits from Jawbone. In recent weeks, the competitor has filed two suits, alleging that the company infringed on patents and stole intellectual property.

The company is venture-backed and its largest shareholders are Foundry Group and True Ventures, with a 29% and 22% stake respectively. CEO James Park and CTO Eric Friedman each have an 11% stake.

Lead underwriters are Morgan Stanley (NYSE:MS), Deutsche Bank (NYSE:DB) and Bank of America (NYSE:BAC).