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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (58486)	11/15/2016 12:08:28 PM
From: richardred	Respond to of 78748

>I've been talking with people using the devices personally or on a corporate wellness plan and I just don't see the products getting pushed out by smartphone apps in the immediate future. Good point. My present insurance carrier currently offers discounts and special benefits to participating health clubs. New this year. A screening blood test for people who generally don't go to the doctor. Tricky as not to cannibalize sales and details to be worked out. Can you imagine if a FIT-BIT discount was offered by insurance carriers as pro active health device for their insured. This could lead to a trend. When you buy Value or what you think is value. You generally have to be able to endure pain. This stock IMO has the signs of what Wall Street once called a glamor stock. RE: Kodak Polaroid). What I think is different today. The Entrepreneurial conditions run at a much faster pace today. (Example-venture capital funding). I could be wrong, but this product the company sells. IMO is different than a FAD. Good luck and I might be joining you after Christmas if the right conditions exist. I think you have one positive thing in your favor. I think conditions are ripe for a good season without massive discounting. When it comes to risk taking. I only have to answer to myself. Therefore I can take higher risk towards the aggressive stock FIT is. P.S. I own and have added recently to CYAN as a aggressive high risk health related pick. I can't prove a case for value based on the past year. However if positive results continue moving forward, and the stock stays where it is now. I believe I can.

To: Graham Osborn who wrote (58486)	11/15/2016 4:27:05 PM
From: MCsweet	1 Recommendation Recommended By Micah Lance Read Replies (2) \| Respond to of 78748

Re: FIT Not saying FIT is a bad buy, but buying based on book value, while great for banks, may be a bad idea for tech. I think over many years my forays into P/B buying of tech stocks were not that great overall (except 2002-2003 when I was getting them below current asset value!). If a technology goes out of favor, book isn't going to help much unless you are below liquidation value. And assuming P/TB is just under 2, this doesn't seem to be the case. If you like the technology and it is a good value stock, then that works. Good luck, MC

To: Graham Osborn who wrote (58486)	11/19/2016 12:25:40 PM
From: staring	Read Replies (2) \| Respond to of 78748

Graham, After your comment I was almost convinced to buy. But I read the following article fool.com and I thought twice. The article makes a very good point, in my view. But I would like to perform my analysis. Once you buy a device (at least I talk by my self) you stick to it for a long time. You may say that it's a problem you also have with Apple, for instance. But in this case, I see less reasons for you to replace a fitness device than for you to replace your iphone bought 2 or 3 years ago for the latest one. That being said the following table illustrates, in my view, the challenge: For the company to double its sales each year, the company has needed to triple its users each year. It currently has ~30 million, in 2016 it would have to have 60 million to generate ~3 Bill in Revenue. In 2017 ~90 million, to generate ~6 billion in revenue. In 2018 ~270 million, to generate ~12 billion in revenue. At this point, I think the market would have matured or near maturing... So the company would need to rely on current users to replace their devices by new ones. If on average every user replaced their devices every 5 years (which I think may be optimistic), there would be around 60 million users buying new devices each year, resulting in ~6 billion in normalized revenues. Assuming a 20% operating margin that would result in a Operating CF of near 1.2 billion times 10 would lead the company to be worth around 12 billion in 2020 (4 years from now). Currently the company is worth 1.8 Billion. So the upside may be 5 times current valuation in a 5 year time frame. Nonetheless, in a more conservative (realistic perhaps) scenario, Fitbit will mature at 100 million customers and will struggle to fight competition, namely of Apple. Moreover, people will replace their devices in 6 years and the company will end with normalized revenues of near 1.5 Billion, generating a Operating CF of 300 million. In that case the company will be worth 3 billion in 4 years... which would still result in an annual return greater than 10%. Of course, if Fitbit starts to be successful in the services side, the story will be different. That being said, the equity story here is very uncertain in my view. I agree with the article that Fitbit lacks a moat like all great brands. And that it will be critical for the company future. I also think that current price levels provide a good entry point even if the company does not become highly successful. But the downside scenario may be also a reality if competition is though enough, and there are plenty of reasons for competitors like Nike, Apple and Garmin become tougher... And currently even the most optimistic analyst seems to be more pessimistic than my latest scenario in terms of sales... Summing up, I will start to monitor the stock price performance, and I will eventually enter if a find an entry point that gives me enough margin of safety.

To: Graham Osborn who wrote (58486)	12/3/2016 6:30:59 PM
From: E_K_S	Read Replies (1) \| Respond to of 78748

Re: Fitbit, Inc. (FIT) - Even Apple can not monetize their Health Tracking Services business (w/ watch and other devises) and they really have no limits on resources they can spend. Key Apple Health Technology Executive Said to Depart Company Matsuoka was hired to lead teams involved with the company’s HealthKit tracking software, the CareKit tool for managing patient medical care, the ResearchKit framework for conducting medical studies via Apple devices, and related machine learning algorithms. Matsuoka reported to Jeff Williams, Apple’s chief operating officer, who also runs the teams related to the Apple Watch, health research, and fitness applications. -------------------------------------------- Would Fitbit, Inc. (FIT) recruit Ms Matsuoka for their last ditch effort to monetize their subscriber base. Maybe they can put lipstick on this Pig and package the company for sale once Matsuoka charts out a plan to accomplish this. Sell to a HMO or some other healthcare company, maybe even Private Equity. More Food for Thought . . . FWIW, been looking at GoPro, Inc. (GPRO) as a similar value Buy but they have similar problem as FIT, little to no earnings and can not monetize revenues from their huge installed user base. EKS