Fitbit ups price range in possible $754 million IPO
The wearable fitness device company will offer shares between $17 and $19 in its initial public offering.
As it gets closer to becoming the first wearable-tech focused company to go public, Fitbit looks to raise even more cash.
The wearable technology maker issued an amendment to a Securities and Exchange Commission filing on Tuesday, saying that it has upped its proposed initial public offering share price range to between $17 and $19. Last month, the 8-year-old startup -- a leading maker of fitness- and health-tracking gadgets based in San Francisco -- announced plans to go public, saying that it expected to offer shares for between $14 and $16.
Fitbit on Tuesday assumed an IPO price of $18 a share and said it expects to net $373.9 million at the midrange price. The company plans to sell 22.4 million shares. Fitbit also disclosed in the filing that shareholders plan to sell 12 million shares. In total, the IPO could net more than $750 million at the top end of the range.
Fitbit finds itself in the middle of a hot wearable technology market. Nearly every prominent technology company is getting into the wearables space in some way, offering fitness trackers, smartwatches and other devices. Apple gave the sector a boost with the launch of its Apple Watch, a smartwatch that doubles as a fitness and activity tracker. Samsung and LG, as well as smaller companies like Jawbone and Pebble, are also competing in the wearables market. Even non-traditional technology companies, like watchmaker Fossil, are seeing opportunities in the wearables space.
When Fitbit goes public on the New York Stock Exchange under the ticker symbol "FIT," it will be one of the first companies focused solely on wearables to do so. While the IPO may not be the largest technology offering nor the most-watched, it'll be a symbolic victory for a wearables market that has grown from obscurity to mainstream attention.
"It's no longer just a niche category and is appealing to a much wider range of consumers who are not fitness buffs," Wes Henderek, an industry analyst with the NPD Group, said last month of the wearables market.
Founded in October 2007 by James Park and Eric Friedman, Fitbit focuses its efforts on a wide range of simple, colorful devices meant to be clipped or strapped to the body for counting steps, measuring sleep activity and monitoring workouts. Fitbit also develops proprietary companion software for smartphones and the Web. In addition to displaying stats, the software includes training tips and a calorie tracker to improve the user's health regimen.
While Fitbit has competitors with far more cash and power in the marketplace, the company has been successful in getting its products onto customers' bodies. In 2011, Fitbit sold just 200,000 wearables. Last year, that number jumped to 10.9 million. Meanwhile, the company's active user base grew from 2.6 million in 2013 to 6.7 million in 2014. Its revenue last year was $745.4 million, and it posted a profit of $131.8 million.
Not everyone is convinced that Fitbit's success was its own making. Late last month, competitor Jawbone filed a lawsuit against Fitbit, accusing the company of poaching its employees to steal vital business plans. Fitbit has fiercely denied the claims and says it plans to fight the lawsuit.
Fitbit's decision to up its IPO pricing suggests the company is seeing stronger-than-expected demand for its shares. Before a company goes public, it shares details on its business with financial institutions. Based on the feedback and expected demand within the investor community, a price range is set, and can be modified as the process goes on.
Establishing a price range suggests an offering is closing in, though exactly when is unknown. Fitbit did not say when it plans to go public and won't announce the news until it's ready.
In total, there will be 34.5 million Fitbit shares available after the company's IPO. If demand is significant, financial institutions will have the right to exercise an overallotment option, allowing them to buy an additional 5.2 million shares.
Looking ahead, Fitbit says that it plans to use the cash raised through the IPO to fund its ongoing research and development, and may also use a port to acquire another company.
Fitbit did not immediately respond to a request for comment.