Fitbit EPS Pivotal for Battle Ground Stock (NYSE: FIT)

FIT Chart at Fidelity.com

Fitbit (NYSE: FIT) reports earnings for its fourth quarter after the close of trading Monday. The stock has been sold down significantly since topping out at $51.90 intraday on August 5, 2015. Several issues have factored into that, including a change in the overall investment environment working against emerging growth stocks, increasing competition, the expiration of share lockup post IPO, critical reviews of a new product, and a big build of short interest. Nevertheless, signs point to a strong holiday season for the company. Thus, I believe, and the whisper number and history indicate FIT should exceed analysts’ estimates this quarter significantly. Given the stock’s deeply discounted valuation to its growth outlook due to skepticism, and the excessive short interest in the stock, the earnings data could catalyze a strong move to the upside. However, investors will require evidence of good market share defense so far this year, and they will pay close attention to forward guidance and the conference call before they heed any call to buy. If the company is pressed on competition and the limits of its current product profile, it is not well-served. But if it can tangibly speak to expanded health care applications and interest and adoption by health care providers and insurers, the stock could soar. I have taken a modest long interest in the stock, as may aggressive investors understanding the risk, but I cannot yet recommend long-term investment in FIT generally to risk averse investors. See my full report on Fitbit (NYSE: FIT) here.

Security	06-18-15 to 02-19-16
Fitbit (NYSE: FIT)	-47%
Vanguard Total Stock Market (NYSE: VTI)	-11%
iShares Russell 2000 (NYSE: IWM)	-21%
SPDR 600 Small Cap Growth (NYSE: SLYG)	-14%
Technology Select Sector SPDR (NYSE: XLK)	-4.3%
GoPro (Nasdaq: GPRO)	-79%

Disclosure: Kaminis is long FIT. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only. Article also interests Garmin (Nasdaq: GRMN), Microsoft (Nasdaq: MSFT), Apple (Nasdaq: AAPL), GoPro (Nasdaq: GPRO), Google (Nasdaq: GOOG), Facebook (NYSE: FB), Best Buy (NYSE: BBY), Amazon (Nasdaq: AMZN). .