Fitbit Shares Jump 50 Percent On First Day Of Trading

3-6-2013 7-57-27 PM 

Thursday, Fitbit began trading on the NYSE under the symbol “FIT,” raising $732 million in total, making it the largest consumer electronics IPO ever. In its first day, stock prices jumped nearly 50 percent, opening at $20 and closing at $29.68. In May, the company filed its SEC Form-1 declaring its intention to go public, noting at the time that it would seek a $14-$15 per share price. But after publishing financial details that investors immediately drooled over, calling the company’s rapid growth and forward projections “phenomenal,” Fitbit executives increased the initial per share price to $20, and by the end of its first day, the shares were up to $29.68.

The news is great for Fitbit, and wasn’t exactly a foregone conclusion. Despite excitement over its financial projections, Fitbit had a number of very public setbacks served up in the weeks leading up to its IPO by rival Jawbone. In late May, just after announcing its intentions to go public, Jawbone sued Fitbit for “systematically plundering” proprietary information by hiring away key Jawbone personnel and encouraging them to download strategic information on future products and business plans before submitting their resignation. The suit is ongoing.

Last week, Jawbone came back with an encore, suing Fitbit again as it closed in on its IPO date. In this suit, Jawbone alleged patent infringement. In the suit, Jawbone charges Fitbit with infringing on its patent for “a wellness application using data from a data-capable band.” In its response, Fitbit argued that it has secured more than 200 patents for the technologies that its activity tracker relies on. The case is also ongoing, and Jawbone has promised to bring the case to the International Trade Commission where it will attempt to block Fitbit from importing its devices and components for its devices into the US. In both cases, Jawbone is seeking damages and a ban on Fitbit selling its products. Despite Fitbit’s current legal uncertainties, investors are excited about the company’s dominant position in the activity tracker market, its profits thus far, and its future projections.

In other digital health IPO news, Dallas-based telehealth vendor Teladoc updates its own IPO filing this week, clarifying that it will offer seven million shares with an asking price of $15 to $17 per share, totaling $137 million in new funding for the company. Within the update, the company forecasts an outlandish $17 billion annual market opportunity for itself. A number it bases on the presumption that it could eventually win 33 percent of the 1.25 billion office visits that take place in the US each year. To frame that best-case scenario, last year Teladoc performed 300,000 virtual visits, earning $49 million in revenue and booking a net loss of $17 million on the year.

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