The company saw sales of its Versa Lite smartwatch fall during the second quarter.
This week, Fitbit saw its shares plummet after releasing its second-quarter earnings report. The company cut its revenue guidance for the rest of the year, blaming this on poor sales of its Versa Lite smartwatch.
Fitbit lowered its 2019 revenue guidance to between $1.43 billion and $1.48 billion. In comparison, previous estimates had the company’s full-year guidance between $1.52 billion and $1.58 billion.
The company’s shares fell more than 20% after hours on Wednesday, bringing the stock to a 52-week low of $3.27 per share. The shares did rebound slightly on Thursday morning but the shares were still down more than 18%.
Fitbit struggles to keep up with competitors
Fitbit got its start with inexpensive fitness trackers that monitored its users’ daily steps. But the company eventually moved into smartwatches to compete with companies like Apple and Samsung.
However, Fitbit has seen its revenue from smartwatches decrease 27% year over year. So this past March, the company launched the Versa Lite smartwatch in an attempt to appeal to more budget-conscious consumers.
The watch costs $160 and can track a customer’s workouts and heart rate. However, it lacks many of the advanced features offered on the Apple watch and other pricier alternatives. For instance, it can’t store music or provide two-way texting functionality.
According to Fitbit CEO James Park, the Versa Lite has received many positive reviews from consumers. But the company didn’t realize that most consumers would prefer to pay more money for a more functional watch.
Can Fitbit return to profitability?
In spite of the disappointing sales from the Versa Lite, the company still managed to beat expectations during the second quarter. The company did report an adjusted loss of 14 cents per share but analysts had anticipated a loss of 18 cents per share.
Fitbit also has a health business which partners Fitbit users with doctors and health coaches. The company’s health business did grow by 16% during the second quarter.
But in comparison, Fitbit’s health business grew by 70% during the previous quarter. And losing less money than expected isn’t exactly a strong selling point for the company.
Fitbit’s shares are down 31% year to date and 42% from a year earlier. And so far, this latest earnings report doesn’t seem to indicate that a turnaround is coming anytime soon.