Fitbit has great quarter. The market doesn't think so
Fitbit (FIT, $17.10, flat on the day but down $1.85 in after-hours trading to $15.25) reported earnings Wednesday after the close. Earnings were 10 cents beating the forecast for 2 cents. Revenues totaled $505 million, topping the estimate for $445 million, with 4.8 million devices sold during the first quarter. BMR Take – A super quarter. But guidance for the next quarter was light, at 10 cents, versus 26 cents expected. And that’s what the market didn’t like.
Fitbit's profits guidance also beat expectations. The company sees $1.17 next quarter, up from an earlier projection. The CEO said: "Based on the first quarter’s performance and momentum, we are confident about the remainder of the year, which is reflected in our increased guidance."
Fitbit sees full-year revenues of $2.5 billion to $2.6 billion. Its second-quarter revenue forecast was better than expected, at $575 million versus $530 million expected.
BMR Take: We don’t see anything bad in this report. We think the market is insane for reacting this way. If there is any logic left in this world, we would suggest that Fitbit is a buying opportunity.
Tesla Reports Sales and Earnings
Tesla (TSLA: $223, down $10 during the day, but up $7 to $229 in after-hours trading) reported Wednesday after the close. Some bullets:
--- The company is on track to deliver 80,000 to 90,000 electric vehicles this year
--- Tesla vowed to reach an annual production target of 500,000 cars in 2018, two years faster than expected.
--- They warned that spending will ramp up in tandem.
--- Elon Musk, the Chairman and CEO said the 2020 volume target was close to 1 million vehicles.
Tesla reported a wider first-quarter net loss, although results broadly beat Wall Street targets. "Increasing production 5-fold over the next two years will be challenging and likely require some additional capital but this is our goal," Tesla said in a statement.
The net loss widened to $280 million, or $2.10 per share from a loss of $155 million, or $1.22 per share, a year earlier. Excluding extraordinary items, the company lost 57 cents per share, about equal to expectations. Revenue rose to $1.15 billion from $940 million.
BMR Take: This stock is not for the faint of heart. If you believe in Elon Musk you are a buyer of the stock. If not, find something more secure. Like General Motors. (Just kidding!) But seriously, there are many growth stocks out there that have less risk than a new car company like Tesla. We are believers in the company but have none of our money in the stock (like ALL of our portfolio stocks.) So it is easy for us to suggest this company as a buy. So please put this investment in perspective for your own personal risk levels and goals.