The shares of Fitbit are plummeting again today amid several problems confronting the company, which produces wearable fitness-tracking devices.
The stock price of Fitbit was down more than 10% at the time of this writing around 12:29 in the afternoon in New York. Over the past five trading days, the company lost more than 35% of stock value.
Today, Analysts at Robert W. Baird cut their price target on Fitbit to $30 from $50 per share due to increasing concerns regarding its new Blaze smartwatch, which was launched at the 2016 CES event in Last Vegas last week.
On the other hand, analysts at Leerink Partners supported the company’s Blaze smartwatch despite the recent selloff. The analysts believed that the Blaze would fill the gap in the company’s product portfolio. Despite their optimism on the product, the analyst reduced their price target on the stock from $81 to $49 per share.
Fitbit faces strong competition
On January 5, Fitbit declined more than 18% after Daniel Amir, an analyst at Ladenburg Thalmann & Co. commented that the company would face more competitors in the wearable fitness-tracking devices market.
Amir noted that wearable fitness-tracking devices company is “now competing head to head with Apple” in the watch category. According to him, Apple would cannibalize Fitbit’s business.
Blaze offers a battery life that last five days on a single charge compared to the Apple Watch (18 hours). Some analysts were not convinced that Blaze could be a strong competitor.
Class action lawsuit filed against Fitbit
On January 7, the shares of the company tanked another 9% on the report that a class action lawsuit was filed against it. The consumers who filed the complaint alleged that Fitbit’s Charge HR and Surge devices failed to measure heart rates accurately.
A board-certified cardiologist found that the devices were off by an average of 25 bpm for heart rates above 110 bpm compared with the measurements recorded from an electrocardiogram (ECG).
The plaintiffs accused the company of false advertising for overly promoting the heartrate monitoring feature of its wearable fitness-tracking devices even if it aware of its inaccuracy.
A spokesperson for Fitbit recently commented that the class action lawsuit has not merit; the company stands by its heart rate technology and plans to defend itself vigorously against the allegations.
Investigation launched against the company
Additionally, the law firm Bronstein, Gewirtz & Grossman launched an investigation against Fitbit on behalf of shareholders. The inquiry aims to find out whether the company and some of its officers, as well as board of directors, violated federal securities laws under the Securities Exchange Act of 1934.
The law firm opened its investigation against Fitbit after learning about the class action lawsuit filed against it.