Fitbit (NYSE:FIT) has fallen over 85% from its all-time highs. Despite the massive drop, investors who are thinking of catching the falling knife should reconsider their position. More often than not, a strong decline in stock price has a justifiable reason, which is what makes bottom-fishing a very risky investment style. While timing the bottom with perfection or near-perfection can result in great profits, investors should be very cautious.
In the case of Fitbit, the company’s decline has been facilitated by declining margins and an increasing threat of irrelevancy in the long run. Like GoPro, Fitbit’s products are likely a fad and many companies have tried to benefit from this fad by entering the space all guns blazing. With the likes of Apple and Samsung competing against Fitbit, the company is consistently under the threat of becoming irrelevant over the long-run. Continue Reading »