Fitbit (NYSE:FIT) was once the top wearables maker in the world, but it was eventually surpassed by Apple (NASDAQ:AAPL), Xiaomi, and Huawei. Fitbit tried to keep up with new devices, but its growth continued to decelerate, its gross margin crumbled, and its stock plunged nearly 80% over the past three years.
However, a recent survey from The Manifest found that more people are familiar with Fitbit’s wearables than Apple’s. The manifest claims two factors kept Fitbit relevant: its first-mover advantage and its affordable devices.
Data source: The manifest. Chart by author.
This indicates that Fitbit could still have the brand equity to stage a meaningful turnaround. But it could be tough — Fitbit only controls about 10% of the wearables market today, according to IDC, and it expects revenue to decline 4% this year as its gross margins contract.
Meanwhile, Apple reported that its wearable sales rose more than 50% year over year last quarter. The initial response to the tech giant’s new Apple Watch Series 5 has also been warm, thanks to its always-on display. Fitbit recently launched several new devices — including the $200 Versa 2 — but time will tell whether it can leverage its brand recognition to gain ground against its rivals.
Leo Sun owns shares of Apple and SNAP. The Motley Fool owns shares of and recommends GOOGL, GOOG, Apple, and Fitbit. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.