Running head: FITBIT 1

FITBIT: A Healthy Financial Look into their Corporation

Sasha Mokhtartoroghi

Arizona State University

OGL-260 Module 5

August 03, 2019

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FITBIT: A Healthy Financial Look into their Corporation

Fitness goals, weight loss, and New Year’s resolutions have made Fitbit a recognizable

corporation. Fitbit, Inc. headquarters is located in San Francisco, California ("Who We Are",

2019). They were originally called Healthy Metrics Research, Inc. but changed to Fitbit, Inc. in

October 2007 ("Fitbit, Inc. - IR Overview - Investor FAQ", 2019). James Park and Eric

Friedman cofounded Fitbit after realizing that sensors and wireless technology could contribute

to fitness and health. Their focus was on creating a wearable product that would change the way

we move ("Who We Are", 2019). This is reflected in their mission statement,” To empower and

inspire you to live a healthier, more active life. We design products and experiences that fit

seamlessly into your life so you can achieve your health and fitness goals, whatever they may

be” ("Who We Are", 2019). Their products are activity tracker, wireless-enabled wearable

technology devices that measure data of steps walked, heart rate, quality of sleep, steps climbed,

and other personal metrics involved in fitness (“Fitbit”, 2019).

When you think of Fitbit devices you automatically associate these devices with weight

loss and achieving fitness goals. Interestingly enough, Fitbit devices have even played a role in

solving murders. In the case of Connie Dabate, her husband claimed that an intruder had broken

into their home and shot his wife. Police used her Fitbit to analyze Connie’s movements. The

tracker showed that she was at the gym at the time her husband claimed she was shot proving

that her husband lied to police about her murder (“Fitbit”, 2019). In another case, Anthony Aiello

was charged with killing his stepdaughter Karen Navarra while visiting her home. Her body was

found 5 days after the murder, but investigators used the data from her Fitbit tracker that showed
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her heart rate spiked when Aiello visited her and stopped five minutes after he left (“Fitbit”,

2019).

Fitbit is not the only wearable tracker on the market. They compete with companies like

Apple, Garmin, Xiaomi, and Samsung to name a few. If you are considering investing, we must

take a look at their current and financial history. Fitbit IPO was filled for $358 million on June

18, 2015 (“Fitbit”, 2019). The company’s stocks began trading with the symbol “FIT” with its

initial offering price at $20 per share ("Fitbit, Inc. - IR Overview - Investor FAQ", 2019). CEO

James Park announced that the company was undergoing major transformation from what he

called “consumer electronics company” to a “digital health company” after Fitbit stock fell more

than 50% in 2016.

In 2018 They partnered with Adidas and release an Adidas-branded Fitbit Ionic and Blue

Cross Blue Shield Association announced a partnership with Fitbit where BCBS will include

Fitbit’s wearables and fitness tracker in its Blue365 program (“Fitbit”, 2019). While this proved

to be a busy year for this corporation, it wasn’t as profitable for its investors.

As we dive into Fitbit’s financial profile keep in mind that their fiscal year ends

December 31st, reporting will reflect 2018. If we look at their Income Statement, Net Income

Growth is +32.96% with Total Revenue of 1.50 Billion however their Revenue Growth is

-7.98%. Their Growth Margin is +39.58% Operating Margin -13.15% and Net Margin -12.36%

("FIT Financial Statements - Fitbit Inc. - Wall Street Journal", 2019). If we look at the Balance

Sheet Cash & Short-Term investments where 723.45M. Total Liabilities where 779.61M, Total

Shareholder’s Equity was 735.94M, and Book Value per share was 2.92 ("FIT Financial

Statements - Fitbit Inc. - Wall Street Journal", 2019). Cash Flow shows capital expenditures

-52.88M, Free Cash Flow +60.33M, Cash Flow Per Share +.46 and Free Cash Flow Per Share
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+.25 ("FIT Financial Statements - Fitbit Inc. - Wall Street Journal", 2019). Keeping in mind

principle 1 and how cash flow determines the value of a business Fitbit did well in this aspect

(Keown, Martin, & Petty, 2014, p. 4). Return on Equity was -23.83 and Return on Total Capital

was -25.35 ("FIT Financial Statements - Fitbit Inc. - Wall Street Journal", 2019). If considering

buying stock keep in mind that their Net Income Available to Common was -$186M resulting in

-.76 EPS ("FIT Financial Statements - Fitbit Inc. - Wall Street Journal", 2019).

Currently, you can purchase Fitbit Class A common stock in the open market through any

registered broker. It is important to note that Fitbit does not expect to declare or pay any

dividends in the foreseeable future ("Fitbit, Inc. - IR Overview - Investor FAQ", 2019). Fitbit is

working on internal growth by reinvest its profits into their business instead of paying out

dividends. This can result in an increase in their firm’s value, earning power, future dividends,

and ultimately increase the value of its stock (Keown, Martin, & Petty, 2014, pp. 257-259).
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References

FIT Financial Statements - Fitbit Inc. - Wall Street Journal. (n.d.). Retrieved August 03, 2019,

from https://quotes.wsj.com/FIT/financials

Fitbit. (2019, July 20). Retrieved July 30, 2019, from https://en.wikipedia.org/wiki/Fitbit

Fitbit, Inc. - IR Overview - Investor FAQ. (n.d.). Retrieved July 30, 2019, from

https://investor.fitbit.com/overview/investor-faq/default.aspx

Keown, A. J., Martin, J. D., & Petty, J. W. (2014). Foundations of finance: The logic and

practice of financial management (8th ed). Boston, MA: Pearson.

Who We Are. (n.d.). Retrieved July 30, 2019, from https://www.fitbit.com/about