4.79 -0.2 (-4.2%) Buy

Looking to invest in FIT? Look for alternatives because it underperformed broader market

13 min read

FITBIT INC has destroyed investor wealth on Thursday. It fell by -4.2% to close at 4.79. On a day when the overall market breadth was 35%, it closed higher than 91% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing FIT]

FIT showed a strong bearish trend over the last 3 months. During this period FIT fell by -13.07% and saw a maximum drawdown of -29.13%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in FIT till volatility reduces and a clear trend emerges.


FIT has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 4 Jan, 2016 to 2 Oct, 2018. Over the last 2 years 11 months and 9 days, FIT underperformed the SP500 index on 53% days.

FIT returned losses on 56% days in the last three months. During this time, it delivered on average -0.13% per day. It delivered it's best daily return of +25.79%, during this period, on Thursday, 1 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 4 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -10.81% of investor capital.

During the last year FIT had 5 profitable months and 7 loss making months. FIT returned profits in fewer months than SP500 index. FIT significantly outperformed SP500 index in Jun 2018, when it returned +20.26% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FIT had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year.

Frugality includes all the other virtues.
-- Cicero

FIT is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in FIT's volatility from 14 Sep, 2018 to 15 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that FIT has positive skewness in it's return distribution. This indicates that investors can expect FIT to make attempts to recover from drawdowns quickly. Which makes FIT a good candidate for momentum based trading on short-term bullish trends or counter-trends.

Investors trading in FIT derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than FIT. Therefore, SP500 must receive a lower allocation than FIT in your portfolio. SP500 index usually has shorter drawdown period than FIT.

On a general note (since you are interested in FIT), AMZN is a large cap that deserves to be closely tracked for investment opportunities.

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