What was once a piñata for short-sellers (since IPO) has transformed itself to one of the most underappreciated med-tech stories in the market with a balance sheet and brand equity that gives investors a tremendous investing opportunity.
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Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
For years, Wall Street has mentioned Fitbit and GoPro in the same breath – for some crazy reason. While their stock charts are similar and they both started as consumer products companies, that is where the similarities end.
Citron has done the analysis that NO ONE on Wall Street has taken the time to fully analyze and appreciate. Based on our work and the information that follows, we will explain why $FIT steps all the way up to $15/share in 2018 if not acquired first.
Let’s get the obvious out of the way. Yes, selling wristbands that count steps is a dead business (but not as stupid as walking around with a camera strapped to your head). While Wall Street normally applauds a company for losing money looking towards the future, Fitibit stock has been punished as investors cannot seem to look past their own wrist.
Read this story and remember when Netflix used to send DVDs in the mail. Fitbit feels no different as it has quietly established:
- Research Partnerships with Google (data sharing, machine learning & more)
- Partnerships with Dexcom for Glucose Monitoring
- Partnerships with the largest insurance companies in U.S.
- >$700 million spend on Research & Development since Jan 2016
- FDA acceptance, in a select premier group, to fast-track the process to help revolutionize digital health regulation
- Reclassification of company from consumer products to med-tech devices
- Establishment of a business model with recurring revenue
- Efforts on monitoring heart disease, diabetes, sleep apnea, Atrial fibrillation and more
And lastly FIT recently launched its first wearable device that sold 1 million units in the first month alone. Time Magazine referred to it as “the biggest threat to the Apple Watch yet”. Note: that all the aforementioned is in the bag and just the beginning.
Google Partnership establishes that Fitbit tech and approach are here to stay
This one quote is the future.
Gregory Moore, MD, PhD, vice president of health care at Google Cloud put it, “At Google, our vision is to transform the way health information is organized and made useful ... By enabling Fitbit to connect and manage key health and fitness data using our Google Cloud Healthcare API, we are getting 1 step closer to this goal. Together, we have the opportunity to deliver up-to-date information to providers, enhancing their ability to follow and manage the health of their patients and guide their treatment.” (Fitbit and Google Announce Collaboration, Apr 2018)
The leader in diabetes monitoring, is also on team Fitibit
Dexcom has partnered with Fitbit to integrate monitoring into future models. With more than 27 million people with Type 2 diabetes, imagine the size of the market. Just watch this interview to understand the importance of the partnership
Click on the link below to listen to the interview that discusses Dexcom and Fitbit, but here are a few excerpts.
“The partnership with Fitbit is all about Dexcom and how we look to innovate…Fitbit especially with their new watch allows an individual to get glucose readings in a place that is more convenient for them…the Fitbit watch is both iOS and Android…” Rick Doubleday, Dexcom Chief Commercial Officer Mar 2018
Just two days ago JP Morgan put out the headline.
“Diabetes 'technological wave' has too much upside to ignore” https://www.cnbc.com/2018/06/08/diabetes-technological-wave-has-too-much-upside-to-ignore-jp-morgan.html
The opportunity in front of Fitbit is compelling and it is up to management to either “screw it up” or execute.
Investors: Fitbit is wooing the right customer -> Insurance
While Wall Street is sometimes late to the party, insurance is participating in the pre-party. In a recent trial program, UNH is actually giving away Fitbits for real time compliance with glucose monitoring (UNH, Dexcom to launch CGM pilot – Jan 2018). From heart monitoring to tracking/analyzing sleep, insurance is seeing improved compliance from patients wearing Fitbits. These include heart, glucose, and sleep.
What gives Fitbit and advantage over the Apple Watch is that it is agnostic and can be used on all platforms, not to mention less expensive (Fitbit’s Versa is its best Smartwatch Yet).
Humana is also working with Fitbit with nearly 4.5 million people in the program and providing incentives to those that use smartwatches or activity trackers (Humana’s Wellness Program).
Article by Citron Research
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