If you’re interested in investing in technology, then you’ve probably heard of Fitbit, Inc. ($FIT). If not, Fitbit, Inc. is an American company headquartered in San Francisco, California and they are most notably known for their activity trackers and wireless wearable technology. The California-based company was once a popular technology investment, but they are now seeing a decrease in shares. It has been predicated that Fitbit shares are already down by more than 25% so far in 2017. Despite reporting a substantial gain on June 1, Fitbit stocks quickly dropped back back down to its trendline, and it is now at risk of a complete breakdown. This should not come as a surprise to investors as Fitbit, Inc.’s financial reports in the first quarter of 2017 had similar results. At first, shares would rise only to decrease later in the week as the reports settled in.
Perhaps the most recent example of selling pressure came from a Dougherty & Co. report, which is an investment bank in Minneapolis, Minnesota. Their report stated that Fitbit, Inc. continues to face a rapid decline in interest in their products. Based on the analyst’s sell-through indicators, there was a modest recovery in May for the activity tracker market, however, it has been trading considerably lower than it was in June of 2016. Furthermore, searching the word “Fitbit” on a number of search engines has decreased by 35% in April. This is one of the best ways to tell if the interest in a brand is fading. As a result, if you’re looking to start technology investing, it is recommended that, at least for the time being, you stray away from investing in Fitbit, Inc.
Coming from a technical viewpoint, Fitbit’s stock started to move in the direction towards its pivot point at $5.69 just last week. However, it did not take long for it to move back to its lower trendline support at around $5.25. It’s important to note that Fitbit’s relative strength index (RSI) appears somewhat flat, but that said, traders should keep an eye out for a breakdown to S1 support at $4.58. This is a result of the moving average convergence-divergence (MACD) trend which is pointing to a further downside in the coming months.
At the end of the day, Fitbit’s soon to be launched smartwatch could act as a crucial catalyst for the company’s long-term prospects, while the stock itself is nearing oversold levels due to its decline in the weeks that just passed. For these reasons, if you are thinking about investing in technology and you had your eyes on Fitbit, Inc., just remember to be cautious with short term positions while maintaining a bearish mentality. This is even more important due to the possibility of a near-term breakdown that will result in shares decreasing even further.
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