Fitbit eyes $358M in IPO

Justine Underhill
·Reporter
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Fitbit has set the terms for its intial public offering. The fitness tracking device maker is seeking to raise $358 million in its IPO, according to its filing with the SEC. The company plans to sell 22.4 million shares, while its existing stockholders are expected to sell 7.5 million shares, priced between $14 to $16. The offering will value Fitbit at nearly $3 billion.

In its filing last month, Fibit reported that its sales have more than doubled each year since 2012, while its revenue surged to nearly $745 million in 2014. The company has sold more than 20.8 million devices since it was founded in 2007.

“Relative to young companies coming public right now this is definitely a reasonable valuation,” says Yahoo Finance Senior Columnist Michael Santoli. “This company is quite profitable. It's not just eking out a small profit…a $3.3 billion valuation, at the upper end of its range, does not seem really out of step with what the business is doing right now. The big question is, over time, is Fitbit going to be able to preserve its market position? Do you have too much competition with other wearable devices?”

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Rival fitness tracking device maker, Jawbone, recently announced a lawsuit against Fitbit for poaching employees and stealing its trade secrets. While Fitbit denied the charges, Santoli notes the suit could be a risk for the company.

"Every[one] is going to try to nip at the heels of Fitbit because it is the incumbent," he says.

While Fitbit's share of the wearable fitness tracking market is nearly 85%, Santoli notes that it is unclear how much room Fitbit has to grow.

"The best estimates are that maybe 10% of people in the U.S. have one right now," he says. "Is it likely to go to 20%, 30% or 50%? I don't know. So it's the size of the overall market plus whether Fitbit can maintain a decent market share. All those things are going to be what you have to put in the mix."

Fitbit plans to post two classes of stock, according to its filing. Class A shares will have ten times the voting power as Class B, allowing directors, executive officers, and significant stockholdersto maintain control of the company. The stock will trade on the New York Stock Exchange under the ticker "FIT."

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