The Potential Value In Fitbit Inc

My Current Position In Fitbit Inc.

I’ve been watching Fitbit Inc (symbol: FIT) over the last couple of years.  During that time I’ve bought and sold shares of Fitbit here and there.  During August of 2017 I began getting more serious and started purchasing shares fairly regularly.  As of January 30th, 2018 I currently own 7,630 shares of Fitbit.  With 1,930 in retirement accounts and the remaining 5,700 in my personal brokerage account.  I have just $40k invested in Fitbit. with their current share price of $5.22.  I’m currently averaging a cost basis per a share of $6.11 (I’m down just around $6,800).  I plan to add an additional $5k over the next month to put my total original investment just above $50k.

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Current Financial Situation of Fitbit, Inc.

There were a few things to call about about the latest earnings report for the fiscal Q3 ending on September 30th, 2017.

Highlights From Fitbit’s Q3 FY17 Financial Report

  • $659 million in cash, with current assets totaling $1.23 billion
  • $564 million in current liabilities
  • $392 million in revenue, with $174 million and -$27 million in gross profit and operating income respectively
  • -$113 million in net income
  • Operating cash flow was $5.5 million, net change in cash for Q3 FY17 was -$38 million.

There’s a few important things to call out from Fitbit’s Q3 FY17 Financial Report

  1. Has a very strong cash position, with operating cash flow remaining positive.
  2. R&D spend remained at $84 million contributing to the lower net income

The Long Term Strategy Of Fitbit

If Fitbit is able to enter into the healthcare side of things.  I believe there is a lot of potential for this company.  During FY18 I’ll be looking for YoY sales increases and their plan for expanding their services.  I still believe that Fitbit is undervalue at it’s current price.  With the market cap just under $1.3 billion, this company has a lot of room to go, if they can prove to the market their value.

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