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New Data Bodes Well For Fitbit, But Not Apple

Aug. 20, 2015 12:44 PM ETFitbit, Inc. (FIT)AAPL43 Comments
Brian Nichols profile picture
Brian Nichols


  • FIT has answered its critics and has proven that it can survive and thrive regardless of AAPL's entrance in the wearables space.
  • New research based on social data suggests the Apple Watch has taken yet another step lower while FIT's performance remains near an all-time high.
  • This social data has had a correlation with actual revenue and growth in the past, and likely will in the future.

My complete change of heart in favor of Fitbit (NYSE:FIT) after its second quarter earnings still baffles me. While I pride myself on being open minded and willing to revisit a thesis, never have I had such a drastic reversal for a company's outlook so quickly. However, data is data, and when all signs point to a certain direction, you are insane not to follow, or at least think openly about what that data means. After Fitbit's second quarter, that open thinking led me to change my outlook to positive, and after exploring yet more, somewhat untraditional information, I believe the stage is set for longevity with Fitbit and the end to a brief, but bright light for the Apple (AAPL) Watch.

Since Fitbit's IPO, I have looked at data from NPD Group, IDC and Slice, which told a story of expected industry growth for both basic and smart wearables, a controlling presence for Fitbit in the basic space, and a rapid decline in sales momentum for the Apple Watch. This data was especially telling, but in looking ahead I turned to social data from a research associate, Jacobs Allen, at startup TickerTags.com. Surprisingly, this data has not only accurately predicted past sales performance but is giving investors a good idea of what to expect in the future.

TickerTags.com uses data analytics to chart the social mention frequency of words and word groupings that represent a company's relevant products, brands, people or trending topics across Twitter. In other words, it tracks what people are talking about everyday consumers. As an investor, this is somewhat interesting to me, especially in predicting the sales performance of consumer electronics. Below is a chart from TickerTags.com that I found to be very interesting.

First and foremost, investors should expect that words and phrases related to "Apple

This article was written by

Brian Nichols profile picture

Analyst’s Disclosure: I am/we are long AAPL, FIT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (43)

pk de cville profile picture
"New Data Bodes Well For Apple, But Not FitBit"

3.6M Watch sales in first 3 months - IDC
pk de cville profile picture

I guess you've read the latest from IDC: 3.6M Apple Watches in Q2.


You owe your 7000 followers an urgent update on your Watch views.
Droney profile picture
This guys ALWAYS writing articles that make broad sweeping judgements about companies, mostly based on his opinion, then has to write another to admit how wrong he was due to some shift in sentiment, company focus, etc and usually by that time...he's wrong again...
Mark Morelli profile picture
Droney: Apple bears always need to revise their commentary and numbers. They always tend to be on the low side (including actual profit that the company makes).
Piptief profile picture
Some more new data came out today. Guess what it showed? That this author hasn't a clue what the heck he was talking about. Apple has almost caught Fitbit for the market share lead in Q2, that for a company selling watches multiple times the price of a Fitbit. We don't even have to go into he margins story to know Apple and Fitbit simply aren't in the same galaxy
Mark Morelli profile picture
Pip: My experience is that Apple bears (and I use that term for most people that do not like Apple products too) tend to "opine" before all of the data comes out. They need to get ahead of the curve (i.e. before the good news). I once read an article about an analyst who camped out in front of the Apple store on 5th Ave. in NYC before the launch of the iPhone 5. He actually counted the number of people standing in line and claimed that since the actual # was lower than for previous iPhone launches Apple was in trouble.
Andreas Hopf profile picture
FIT is a one-hit-wonder stock, like GPRO or the "3D Printing" stocks before, beloved by certain U.S. investors who believe the world ends on the Atlantic and Pacific coasts.

Meanwhile, Apple is not doing too badly with around 3 million units sold http://on.mktw.net/1MQ...
Piptief profile picture
This author doesn't have a clue what he is talking about. I don't know how he could possibly be mentioning Fitbit and Applewatch in the same sentence. Clueless
Mark Morelli profile picture
Piptief: It's an opinion (although it's a incorrect one).
Piptief profile picture
Yes @ Mark Morelli ...what I posted was also an opinion :)
charles pierce profile picture
i think you are wrong on this one Brian. apple watch is quietly selling well and will build momentum. it is a long term product. fitbit may not be around in two years. all apple has to do is release a "fit" version, if they want to. think what would happen to fitbit if they did. i think we should have learned by now not to underestimate apple. thks
vikramnjnjjdjnd profile picture
Was not Nike in this space not to long ago? Then decided to bail on fitness bands? The important thing to worry about is the global sell off and when you can buy all these stocks much cheaper.
mogwan profile picture
If Apple saw financial credence in Fitbit devices they could build their own for a much lower unit cost and sell at the same or lower ASP... Same as GoPro. these companies exist because Apple has their eye on the ball field, not just the ball...
BuyToSell profile picture
No hardcore workout person is going to risk harming their expensive fancy apple watch by sweating all over it and potentially banging it on some hard surface at the gym. Not to mention always dragging their iPhone around.
Joe de Mencia profile picture
Do you even lift, brah?
BuyToSell profile picture
I actually think it's bizarre that people keep talking about Fitbit and apple product as if they're comparable. Its like oh, amba, intc and swks must be competitors, they all make chips! No, they're completely different products in completely different markets with different opportunities! It's a little bit ignorant, to be honest. Just goes to show that people who frequent financial site forums are not exactly fitness nuts.

Good article, clever way to compare sentiment.
vikramnjnjjdjnd profile picture
Apple vs Fitbit in the same sentence. Very funny
Bobt100 profile picture
2nd gen product should see significant changes. 1. Remove phone teathering. Many places I do not wish to carry my phone. However if I get a text or mail I would like to respond and/or at lease read it and I can do such actions on my wrist.
2. Improve battery life. 3. Apps to send Health data automatically to your doctor
4. Gps location tracking for letting folks know where you are at. 5. Integrate Apple pay into watch. 6. App for political statements to be flashed to addresses of watch users. 7. Qcode scan in say you walk into grocery store, scan qcode on entrance and discount coupons sent to watch to use at checkout. 8. App to contain ID cards on watch....all of this is eventually possible....what do you want to build....
Mark Morelli profile picture
My guess is Apple Watch 2.0 will have all or most of your recommendations, which are all excellent.
If FIT has a good quarter, Wall Street punishes, saying they can't repeat. If they have a bad quarter, Wall Street will punish as well. I'm convinced the problem is WS, not FIT.
MWAdkins profile picture
I have owned a Basis (now Intel) watch for over two years now (2nd generation is the Basis Peak) and will confirm I had no interest in an Apple Watch. Two market segments, two value props, no overlap, just captured in the broad "wearables" market. Based on my work in the medical device industry there is a huge opportunity in the "health/sports segment." Can't speak to the "Dick Tracy talk to my phone segment" where Apple plays. :-)
After peple realize that a step tracker isn't any kind of indication of their health, Fitbits are going to be about as popular as the pet rock. The Apple watch tracks much more and provides functions beyond: "did I walk today?"

Maybe when Fitbit adds run mapping, music playing, heart rate and calories burned, it'll be able to compete with apple on just the health tracking, then they can work on the personal communications and entertainment aspects.

Maybe if you're too poor to afford $250 more, you shouldn't be buying a one trick $100 pony either.
Joe de Mencia profile picture
Who says their R&D isn't spending like crazy to generate new ideas?
Are you serious? You just listed about everything the Fitbit charge HR does. Fitbit has heart rate , tracks flights of stairs climbed, estimates calories burned based off heart rate, weight, and age....and also offers exercise tracking with run mapping and music controls through the phone it's connected to. I own both the Fitbit and apple watch and DEFINITELY see the appeal of one over the other depending on the person.
I didin't see a mention of Fitbit's unit sales, only anticipated revenue. How does their unit sales compare to Apple's projected Apple Watch unit sales?
I have a Fitbit and use it every day. It works well for what it does and is seamless. The Apple watch is just an overpriced extension of the iPhone and is redundant in my opinion. Seriously, most people are ditching their watches these days since they are tethered to their smart phones.
Mark Morelli profile picture
Yes it is an extension of the iPhone. The company even said that. People understand that.
If a person just talks about his or her "watch" as everybody knows what kind of watch he/she owns, will this kind of social-media-data analytics recognize it as an "Apple Wach" if it is?

Maybe in the beginnig people were using the full name "Apple Watch" and now just use the nickname "watch".
Let's just ignore the surge in price the week right before Q2 earnings and then ask why has the price dropped almost 9%? I don't think FIT is going to hit much higher than $44-45 again.
kazetg3 profile picture
This article cited the Slice data which has been thoroughly reviewed and discussed in past SA articles to be, simply put, extremely inaccurate.
I don't agree with the premise that social media frequency correlates with sales. But even if we move past that, there are still a few holes in the theory.
1. You are speaking in unit volume versus profits. How many units does fitbit need to sell to match the profit that Apple earns from one $10,000 watch? Just as in smartphones, Apple will dominate the profit share and may not dominate the market share.
2. The trend analysis is unfair comparing the decline of Apple watch versus Fitbit. There was so much pent up excitement over Apple watch it was almost certain to see a decline after its release, in both excitement and sales, after the first initial release.
3. Fitbit is a very basic tool that does a few things reasonably well. I believe the Apple watch is destined to be a very different product from Fitbit a few years from now with a very different value proposition. Personally I would don't expect fitbit to change dramatically in the near future but Apple Watch will quickly evolve as developers create new applications for the product.
Brian Nichols profile picture
1. You are right, but look at the market cap disconnect between the two companies. FIT shouldn't be producing the same profit, and I doubt that AAPL is selling too many $10,000 watches. Consumers with that type of money to blow go Rolex.

2. You are right again. However, sales declined from 200,000 per day to 20,000 as of last month?! The fact that social mentioning once more declined in the last two weeks suggests to me that sales for the Apple Watch might have fallen yet again.

3. I didn't say the two devices are similar by no means. In fact, I have written about the differences, but many assumed that the Apple Watch would penetrate the basic wearables market and be the death of FIT. That's simply not the case.
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