Fitbit (NYSE: FIT) is entering the smartwatch market at the right time. Just as wearable device growth is slowing, the company’s shift towards smartwatch could give the company a new lease on life.
According to IDC, wearable shipments in Q2 grew 10.3% year-over year. But smartwatch sales are growing at around 60%. Apple Watch (Series 2) is taking the bulk of the market share. Instead of ceding market share for its fitness devices, Fitbit will compete with Apple (NASDAQ: AAPL) and to a lesser extent, Garmin (NASDAQ: GRMN).
Fitbit’s Ionic smartwatch is a promising product. According to Raymond James’ Tavis McCourt, the Ionic will add meaningfully to sales. The device costs $300, has a very good battery life and is well-built. Fitbit is differentiating Ionic from other smartwatch through the SpO2 sensor. This allows for health tracking. The smartwatch also has features other competitors offer: GPS, heart rate and monitoring.
Fitbit is an attractive trade. It is still a possible buyout target down the road. Notice that Fitbit said a special Adidas edition will arrive next year. The sports apparel supplier could decide to acquire Fitbit if Ionic does well in the marketplace
