Ask Matt: Why is Fitbit having a fit?
Q: Why is Fitbit having a fit?
A: Fitbit (FIT) quietly became the activity tracker maker to beat - when no one was trying to beat it. But that's changing.
Shares of the maker of wearable fitness trackers declined 8% in afterhours trading despite delivering better-than-expected profit. Fitbit earned 24 cents a share, beating expectations by 140%. Revenue at $409.3 million for the quarter beat expectations by 14%. The company also boosted guidance for the fourth quarter.
Investors, though, are starting to think about how things are going to get tougher for Fitbit as the competition heats up. Interest in the wearable market - still in its early stages - continues to attract competitors. Apple (AAPL) along with Google's holding company Alphabet (GOOGL), Samsung, Garmin (GRMN) and Microsoft (MSFT) are all offering wearable products that handle many tasks consumers have used their Fitbits for.
Keeping up will likely require investment. To that end, the company is selling 7 million new shares - a big deal considering the company only has 8.4 million shares outstanding currently. Current Fitbit investors also plan to sell an additional 14 million shares, which adds to the supply of stock investors need to digest. More competition and more stock weigh on the stock. Still, shares closed Monday up more than 35% for the year to close at $40.80.
Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz