Fitbit Races Across IPO Finish Line, Makes Day for Investors, News Punsters
Newly public San Francisco fitness wearables company Fitbit (NYSE: FIT) made skeptical Wall Street observers believe in unicorns on its first day of trading today, as its shares sold for 50 percent more than the $20 price set for its initial public offering.
Fitbit’s line of business—tech-enabled wristbands and other wearable items that track jogging and other workout moves—also created a field day for business reporters who love to describe financial news with relevant puns.
In the last sprint toward its IPO this week, Fitbit stair-stepped its price range upward from the $14 to $16 originally stated to $17 to $19 on Tuesday, then made a last jump to $20 when the final price was set on Wednesday. But at the starting bell today, Fitbit’s shares shot out the gate at $30.40. They maintained that pace in the following hours.
The IPO reaped more than $700 million for Fitbit, and its market value would have been about $4 billion at the $20 price. But the company’s market capitalization is currently pegged at more than $6 billion while its shares are trading at about $30 this afternoon.
Fitbit’s strong debut was not only a boon for the company founded in 2007, which became profitable last year on revenues of $745 million and has watched its sales continue to grow this year. The IPO also richly rewarded venture firms that invested in Fitbit’s last funding round, according to a guest post on Venture Beat’s IPO Scorecard by Jeremy Abelson of Irving Investors and Ben Narasin at TriplePoint Ventures.
Abelson and Narasin calculate that at the first trade at $30.40, Fitbit investors True Ventures, Foundry Group, SoftBank Capital, Sapphire Ventures, and Qualcomm Ventures realized a 1,968 percent return, or a 434 percent annualized return.
The rejoicing, of course, was mixed with the usual dire caveats. The Economist, with Malthusian gloom, wondered whether Fitbit could maintain its standing as the leading wearables maker amid a growing population of strong competitors, including Jawbone and Apple, which recently debuted the Apple Watch, as well as Microsoft, Samsung and Google.
The Economist’s best pun: “Fitbit has an uphill run ahead.” The company, whose products range from $60 to $250, is sandwiched between high-end rivals like Apple and Garmin, and lower-end producers like China-based Xiaomi that compete based on price.
The Economist wasn’t the only observer to bring up the cautionary tale of Nokia, which dominated the mobile phone market until it was crushed by Apple and other competitors.
Investors will be scrutinizing sales numbers in the marathon now being run by a crowded field of contenders. Fitbit, one of the pioneers of personal fitness tracking, has now entered the public markets, where the self is always quantified.