Insider Concerns Just Created a Buying Opportunity in Fitbit, Inc. (FIT)

On 08 February, shares of Fitbit, Inc. (NYSE:FIT) closed higher after a volatile session. The shares accumulated 0.04 points or 0.62 percent at $6.49 with a light trade volume of 2.996 million shares. After opening the session at $6.39, the shares went as high as $6.51 and as low as $6.34, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $1.6 billion and now has 247 million shares outstanding. Fitbit, Inc. (FIT) stock has gained 14.26 percent of market value in 21 trading days.

FIT stock has a trailing 3-year beta of 1.72, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.83 a share in the trailing twelve months. The stock’s value has surged 30.58 percent year to date (YTD) against a rise of 23.62 percent in 12 month’s time. The company’s shares still trade -16.69 percent away from its 1-year high of $7.79 and 53.43 percent up from 52-week low of $4.23. The average consensus rating on the company is 2.7, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Fitbit, Inc. (FIT) will probably climb 2.16 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $10 price as 12-month high target. This represents a whopping 54.08 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $6.25, which represents a return potential of -3.7 percent when compared to the closing price of the stock of $6.49 on Friday, February 08. The lowest price target for the stock is $4 — slightly more than -38.37 percent from FIT’s current share price.

History has shown that shares in Fitbit, Inc. have gone down on 9 different earnings reaction days and are predicted to add 0.14 percent when the company reports upcoming earnings. Investors will get their next glimpse of FIT’s Q4 earnings on February 25. Analysts are forecasting revenue to suffer decline of -0.5 percent to $568M in the fiscal fourth quarter, while earnings are seen soaring by nearly -450 percent to $0.07 per share. It earned $0.04 per share, better than the -$0.01, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $394M, better than the $381M analysts expected. Earnings are estimated to increase by -114.1 percent this year, 37 percent next year and continue to increase by 10.5 percent annually for the next 5 years.

Let’s take a look at some insider activity at Fitbit, Inc. (NYSE:FIT) and see the pattern. The earliest insider trade took place on 01/10/2019. Missan Andy parted with a total of 7.5 thousand shares of company at average share price of $5.66. The total for the sales was set at $42.45 thousand. After this transaction, the EVP, General Counsel, Sect. account balance stood at 78.72 thousand shares. The stock grew 14.66 percent since that insider sale. On 12/18/2018, Missan Andy, EVP, General Counsel, Sect., sold 110 thousand shares at a price per share of $5. This removed 550 thousand shares from the insider’s fortune and the stock saw a 29.8 percent rally in value since the news became public. This transaction left 78.72 thousand shares in the EVP, General Counsel, Sect. account.

On 12/10/2018, EVP, General Counsel, Sect. Missan Andy performed a sale transaction worth $36.68 thousand. This sale at $4.89 each has eliminated 7.5 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded 32.72 percent increase since the transaction was reported. The insider now is left with 173.86 thousand shares remaining in the account. Missan Andy, who performs the EVP, General Counsel, Sect. job, sold 2.53 thousand shares for $14.22 thousand. The disposal occurred on 11/16/2018 was priced at $5.61 per share. The share price soared 15.69 percent since the reporting date. Missan Andy now left with a stake of 173.86 thousand FIT stock worth $1.13 million after the insider selling.

The stock is currently hovering around the first support level of $6.38. Below this, the next support is placed in the zone of $6.28. Till the time, the FIT stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 71.95 on daily chart, which may remain a cause for concern. If the price breaks below $6.28 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $6.55 mark may result into a pull-back move towards $6.62 level.

Further, it is sporting a 1.06 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.19. 42 percent is the gross profit margin for Fitbit, Inc. and operating margin sits at -14.5 percent. Along with this, the net profit margin is -16.3 percent.