Fitbit update: Flex 2 production issues, shares slump & new form factors in 2017

Safe to say Fitbit's latest earnings call worried shareholders a little
Fitbit: Flex 2 delays & shares slump

The honeymoon period is well and truly over for Fitbit. It just held an earnings call in which it slightly missed revenue expectations, lowered its predicted revenues for the end of the year and its CEO James Park admitted production issues building the Flex 2.

As a result of all this middling-to-bad news, Fitbit shares dropped by a massive 30% on Wednesday to under 9%, down from a high of 20% after its IPO last summer.

Read this: Fitbit Flex 2 review | Fitbit Charge 2 review

To be honest the panic is over Fitbit making $504 million not $507 million in the last quarter - NBD I'd say but then again I'm not an investor. What's coming up, money wise, looks slightly worse.

So for Q4, which should be a big performing few months from October to December 2016, Fitbit now predicts revenues will be between $725 and $750 million. Problem is analysts were predicting more than $980 million for the quarter.

So why is Fitbit - which sells more wearables than most of its rivals combined - struggling to sell? The reasons given were lower demand, a 45% decrease in growth in Asia-Pacific - maybe China's fitness tech boom was just a fad - and also Flex 2 manufacturing issues. We don't know yet whether smartwatch style devices like the Blaze are eating into tracker sales or smartwatch sales are low as they are generally.

Essentially, waterproofing strikes again. It caused Jawbone no end of trouble with the endlessly delayed UP3. Here's what Park had to say on the Flex 2 issues: "It's fairly complex and that's down to its incredibly tiny form factor. That made it incredibly difficult to swim-proof it and find batteries for it. We had to move to a fully automated production process."

Read this: Our chat with James Park - heart rate accuracy and the future

Fitbit actually sold 5.3 million devices in the third quarter so, for a wearable tech company, it's still top of the pile. "We continue to grow and are profitable, however not at the pace previously expected," said Park. The one bright spot from the earnings call was that Fitbit's CEO teased that we will see "new form factors" in 2017.

When we got the scoop on Fitbit's two latest trackers, which turned out to be the Flex 2 and Charge 2, late this summer, Fitbit's shares actually rose but it looks Fitbit's investors want something more concrete to pin their financial hopes on for now.

Fitbit update: Flex 2 production issues, shares tanking & new form factors in 2017

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