What’s lying beyond the surface for Fitbit Inc (NYSE:FIT) and GoPro Inc (NASDAQ:GPRO)? These gadget companies disappointed in their latest quarterly earnings and offered a grim outlook, leading to questions of whether the peak in niche gadget companies could be over.
Some have started comparing Fitbit and GoPro to BlackBerry Ltd (NASDAQ:BBRY), the pioneer of smartphones that has been reduced to a pale shadow of its former self thanks to Apple Inc. (NASDAQ:AAPL) and other competitors raiding its market.
Interestingly, Apple appears to also have a hand in the troubles facing Fitbit and GoPro.
Loaded Apple Watch a threat to fitness trackers
Apple’s Apple Watch is pushing aggressively into the fitness tracker market. For instance, users can use the device to monitor your heart rate and track other health indicators. By adding more health and fitness functionalities to the Apple Watch and combining them with the core functions of the device such as the ability to stream music and make calls from the wrist, Apple is taking the fight to the doorstep of Fitbit.
Though Fitbit is finding opportunity in selling its fitness trackers to corporations seeking to keep their employees healthy to cut healthcare costs, corporate wellness programs are only a tiny fraction of Fitbit’s business today, yet the Apple Watch threat is increasingly looming large.
iPhone 7 A Slap On The Cheek For GoPro
As smartphones such as Apple’s iPhone 7 get improved camera capabilities, including water resistance features, the consumer appetite for standalone cameras could diminish. Though GoPro hardly cites a threat from smartphones for its Hero line of action cameras, the company’s disappointing sales in the latest quarter tell a different story for its future.
Though GoPro is trying to diversify its revenue stream, including by creating a media platform and selling drones, the recall of its Karma drone just a few weeks after it launched could dent GoPro’s prospects in drone business.
Downbeat earnings
Fitbit’s 3Q16 EPS of $0.19 met the consensus estimate, but revenue of $504 million missed the consensus of $509 million despite growing 23% YoY. The company cut its outlook for 4Q16 and full-year 2016. GoPro on the other hand posted adjusted EPS loss of $0.70, falling short of the consensus estimate for EPS loss of $0.54. Revenue of $240.6 million also missed the consensus of $303 million.
