Fitbit Inc (NYSE:FIT) has started to move up in recent sessions, after the company reported a deal of providing 335,000 activity trackers to Target. The “big box retailer” is planning to use the device for monitoring the movement of employees in its stores around the country. This was also one of the largest deals conducted by Fitbit.
Even though the company has recently entered the stock market, after conducting its IPO in June 2015, it has gained 80% in terms of value. The IPO was priced at a share price of $20. However, analysts have started casting doubts on the stock and claim that it is severely overvalued. One analyst, David Seaburg , even compared the stock to GoPro. The company stock rose to new heights after conducting IPO and after some time it slowly began its descent.
Furthermore, GoPro had witnessed a similar surge in share prices, which reached to $100 levels, but once it started to crash it did not stop until it reached current trading prices of around $35. However, Mr. Seaburg did state that the company might stay near its highs for another 6 months, but there would not be any further growth from thereon.
Wall Street analysts, on the other hand, are being more optimistic with the stick and have issued an average overweight rating for FIT, with the average price target standing at $51.71. Mr. Seaburg is of the view that hardware companies tend to trade at lower stock prices and FIT’s crash to those levels is inevitable. However, the most compelling point in the argument against Fitbit is that the company has a lot of upcoming competition. Manufacturers of sports goods and smart devices are working to develop, similar and better products for their consumers. However, since smart devices tend to be an all in one solution for consumers, they would be the ones to capture the largest share of the upcoming market.
Fitbit Inc (NYSE:FIT) closed at a share price of $37.05, after reporting a surge of 12.14% and a trade volume of 1,400 during the September 16 session.