Fitbit shares shot up a day after the launch of the Apple Watch Series 3, which is largely focused on fitness. It is kind of strange as the Apple Watch is seen as a rival to Fitbit’s devices, and usually, a new product from a rival pushes the shares of its competitors down. Nevertheless, it comes as good news for Fitbit, which has lost market share in recent years due to rising competition in the wearable segment.
Fitbit Ionic vs. Apple Watch
There was some nervousness among Fitbit investors before Apple’s event when the next Apple Watch was yet unannounced. However, it mostly fizzled out after the announcement because the Fitbit Ionic has some unique features, despite Apple’s renewed focus on health applications.
Stifel Nicolaus analysts stated that the Ionic enjoys some “key differences” from the Apple Watch Series 3, including compatibility with non-iOS devices, a more powerful battery, sleep tracking and a price advantage.
In terms of the battery, Fitbit emerges as the clear winner with a four-day long battery life compared to just 18 hours for Apple’s watch. The compatibility of the Fitbit Ionic with non-iOS devices is its biggest advantage, making it much more relevant in the emerging Internet of Things (IoT) era. Another advantage is that the Ionic is cheaper. The Ionic sells for $299, while the Series 3 costs $329 without LTE capabilities and $399 with LTE capabilities.
However, Apple has a dedicated user base for its smartwatches as well. Stifel Nicolaus analyst Jim Duffy noted that the Apple Watch enjoys an early mover advantage and robust app support.
“Our view remains that Fitbit is playing catch-up in an intensely competitive category,” the analyst said.
The Fitbit Ionic will hit the market in October, while Apple Watch Series 3 will be available by September 22. Stifel has a Hold rating on Fitbit stock with a price target of $6.
Fitbit shares are doing well
Lately, it has been raining good news for Fitbit investors. Last week, Fitbit shares rallied by as much as 10% after the company revealed that its watches will be compatible with Dexcom’s glucose-monitoring sensors, which enables users with diabetes to track blood sugar levels. For continuous tracking, the Dexcom system requires users to fix the sensor just below the skin, and then the system gives updates every five minutes through an app.
“With Ionic, we are focused on driving positive health outcomes and more health focused tools, and this collaboration is a wonderful example of how we plan to bring that vision to our users,” said Fitbit CEO James Park in a statement.
Swatch Group, on the other hand, tumbled by over 3% as investors saw more competition coming in the form of the Apple Watch Series 3, which is capable of making calls and sending messages without the need of a mobile phone, notes Bloomberg.
Jon Cox, an analyst at Kepler Cheuvreux said, “The fact the new watch is untethered from the phone has the potential to be a game changer. It is a fight for wrist real estate and superb functionality versus a simple quartz watch. In many cases the quartz watch is going to lose.”
On Wednesday, Fitbit shares closed up 6.31% at $6.65.