*WINNER* An Apple a day may not be so healthy for its competitors – How did Apple’s entrance into the wearables market affect the previous industry leader, Fitbit?

Abstract

Investors projected great things for Fitbit's IPO in June 2015 given the company's competitive position and fast sales growth in a booming market. The company sold 4.4 million wearable devices in the second quarter of 2015 and stocks traded for over $51 per share. However, stock prices consistent fell to less than $6 per share after Apple Inc. released their wearable devices. The company’s survival depends on sustaining market share in the wearable market in spite of Apple’s loyal customer base, diversified products, and size.  My analysis includes an examination of their stock prices as well as financial statements. I calculate the change in overall firm value of Fitbit before and after Apple’s release of their second Apple watches on September 16th, 2016. In addition, I track the quarterly change in key financial ratios, such as Profit Margin, Financial Leverage, Return on Assets, and Return on Equity, during the period of June 17th, 2015 to December 31st, 2018. I analyze investor’s perception of Apple’s entrance into the market on Fitbit’s firm value by measuring the change in Fitbit Inc. and Apple Inc.’s total market capitalization at key dates. This research provides anecdotal evidence of what can happen to small tech companies when Apple decides to offer their product.
Faculty Sponsor: Sid C. Bundy, Assistant Professor of Accounting