Fitbit's (NYSE:FIT) mission, according to their S-1 filing in May of 2015, is to help "people lead healthier, more active lives by empowering them with data, inspiration, and guidance to reach their goals." This mission has expanded, and rightfully so.
The company's recent acquisition of startup Coin's personnel and intellectual property for wearable payment solutions, is testament to Fitbit's shifting direction. Fitbit's purchase reassures investors that it understands the competitive landscape and that it is making moves to expand its scope of service. In the press release, CEO James Park hints at the broader mission: "We are focused on making wearable devices that motivate people to reach their health and fitness goals, and that also make their lives easier with the smart features they need most."
Notice how that last phrase differs from the company's original mission in 2015.
Why is this important? Investors must know the vision of the companies they own. How else are we to measure an organization's performance in relation to its stated goals? By reviewing the missions of the company's we invest in, we can understand if their visions are too narrow, too broad, or if the companies sync with our expectations.
When writing its original mission for the S-1, Fitbit may not have taken the advice of Stephen Covey, author of "The 7 Habits of Highly Effective People". Had they "began with the end in mind," as habit two prescribes, their vision may have been broader. Serving people to "lead healthier, more active lives by empowering them with data, inspiration and guidance," failed to take into account all of the other services it would have to provide to remain viable. Fitbit's success thus far has been with products and services centered around fitness, it is only a matter of time before consumer's will demand much more from their wearables.
Thankfully, Fitbit is moving in this direction. Its Blaze and Surge products, with cell phone notifications for messages and calls, were common sense evolutions that signal its movement beyond health and fitness tracking. And Fitbit's stated reason behind the acquisition of Coin's personnel and intellectual property: "to develop an active NFC payment solution," shows a willingness to purchase for its future.
Such acquisitions and further innovations are essential to remaining viable. We cannot take lightly Mark Hibben's cautionary article citing Fitbit's lack of an Intellectual Property moat. While the acquisition of Coin's personnel and intellectual property is a good start, it is only one additional feature. To make greater strides in expanding its moat, Fitbit must push forward relentlessly, with continued sensible acquisitions and mind blowing innovation.
As explained in Fitbit is No GoPro, Fitbit leads an expansive market that is still inventing itself. Healthcare monitoring and services centered around personal fitness has given Fitbit the first mover advantage in wearables; however, fitness features are just the beginning. We're not going to wear separate wearable devices to lock doors, start our cars, automatically turn on lights, make payments, and gather personal health information; instead, we will look to exciting new designs that merge these features together. To stay ahead, Fitbit must consistently bring such wearable wonders of our imagination into the market.
As of writing this, Fitbit's market cap is 3.07 billion; a relatively small market cap compared to the potential scope of the wearable market. While Fitbit is making the right moves to remain viable in the future, this extraordinary undertaking places the company within the crosshairs of Apple (NASDAQ: AAPL), Samsung (NASDAQ: OTC:SSNLF) and privately held Xiaomi (Private:XI). We must watch closely to see if Fitbit can maintain a leadership role as the competition closes in. We also must monitor its ability to deliver great products, while incorporating these innovative "smart features" at an effective cost. While management's statements regarding the company's mission shows Fitbit is aware of the consumer's broadening needs, I'm remaining cautiously long.
Disclosure: I am/we are long 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.