Fitbit's initial public offering is showing signs of health. After initially pricing the stock at $20 a share, the fitness-tracking company opened for trading on the New York Stock Exchange at $30.40 and ended the day at $29.68, valuing the company at just over $6 billion.
While Fitbit's products are just one among many in the fitness-tracking market, its IPO is distinctive for a quickly growing technology company: First, because it's happening at all — the number of technology IPOs have shrunk as fast-growing companies can easily raise tens and millions of dollars from private investors. Second, it's happening amidst two lawsuits from its chief rival, Jawbone. And third, Fitbit's business isn't just growing, it's actually profitable.
Whether this means shares will be a good buy in the long run, of course, remains to be seen. Besides the lawsuits from Jawbone, the company recalled its Fitbit Force product last year following reports of consumers suffering rashes after wearing it, and it is still the the defendant in several personal injury lawsuits.
Beyond internal problems, it also faces steep competition not just from companies that focus on fitness trackers, but also apparel companies that have fitness software, like Nike, along with huge software and hardware companies that make fitness-tracking hardware and software, like Apple, LG, Microsoft, and Samsung.
The company said Wednesday night that it priced its shares at $20, after raising the expected range from $14–$16 to $17–$19.
The $20 price valued the company just north of $4 billion, a valuation quickly surpassed once trading opened on Thursday. But an opening-day pop doesn't guarantee investors will continue to view the company favorably going forward. Some of this year's bigger technology IPOs, like the enterprise software company Box and the craft marketplace Etsy, remain below the price they hit at the end of their first day of trading. Fitbit and its early shareholders selling into the deal have raised about $732 million, with an option to sell more shares if demand for Fitbit stock is strong.
There have only been 10 technology IPOs so far this year, according to Renaissance Capital, raising some $2.1 billion, excluding the Fitbit deal. In the first half of last year, there were 37 tech IPOs, raising $6.6 billion.
Fitbit said that it made $132 million in profit in 2014, up from a $52 million loss the year before. In the first three months of this year, the company said, it had $48 million in profit, up from $9 million in the first three months of 2014.
The company says it sold 3.9 million devices in the first quarter of the year, up from 1.6 million in the first quarter of last year. Revenue has been growing even faster than profit, jumping from $271 million in 2013 to $745 million in 2014. In its regulatory filings describing the company, Fitbit cites data from the NPD Group saying that it controls 85% of the fitness-tracker market.
But while the occasional consumer technology IPO may not garner all the massive fees and attention that the banks running the deal and the New York Stock Exchange crave, Fitbit is shipping in some excitement from San Francisco to Wall Street.
The company is bringing in one of its brand ambassadors, celebrity trainer Harley Pasternak, to lead a public exercise class outside the Exchange, and giving out 100 free Fitbit devices, along with free snacks and juices.
Whether this attracts the same crowd as Shake Shack, which went public earlier this year and attracted hundreds of suited Wall Streeters who wanted a free burger from the company's truck, remains to be seen.
This piece has been updated with Fitbit's closing stock price.