Why the Fitbit IPO Price Range Was Revised Today

It's just a couple of days before Fitbit stock will start trading, and the Fitbit IPO price range has been increased.

The Fitbit IPO price range was hiked by $3 today (Tuesday). It's now set at $17 to $19 per share, up from $14 to $16.

This week's Fitbit Inc. (NYSE: FIT) IPO is one of the hottest new offerings of 2015.

fitbit ipo priceFitbit will be the first public company solely dedicated to wearable tech - an exploding market on track for a $19 billion valuation by 2018.

The company plans to sell 29.85 million shares. The deal will raise $621 million at the midpoint of the range. That's roughly 39% more than the original amount of $448 million.

After the IPO, Fitbit should command a $3.7 billion valuation. It's tied with Black Knight Financial Services Inc. (NYSE: BKFS) as the most valuable tech IPO of 2015, followed by Inovalon Holdings Inc. (Nasdaq: INOV) and GoDaddy Inc. (NYSE: GDDY).

Here's everything you need to know about the Fitbit IPO price and how it compares to other 2015 tech IPOs...

Fitbit IPO Price Contends with Other Recent Tech Deals

The Fitbit IPO is priced near the most popular tech IPOs this year.

One of the first tech IPOs of 2015 was Box Inc. (NYSE: BOX). The cloud storage company went public on Jan. 22. It priced above its $11 to $13 range at $14 - which is 18% lower than the low end of the Fitbit IPO price range.

The two biggest tech IPOs of the last few months were GoDaddy and Etsy Inc. (Nasdaq:  ETSY).

GoDaddy had Fitbit's price range of $17 to $19 and ended up raising $460 million in its IPO. Etsy, which went public on April 15, set its range at $14 to $16 and ended up raising $267 million.

But the price ranges of these two IPOs were too high given their lack of profitability...

GoDaddy has yet to make a profit in its 18-year history. It lost $143.3 million last year and suffers from tough competitors like Google Inc. (Nasdaq: GOOG, GOOGL), which entered the web domain business with its new service, "Google Domains."

Etsy's situation is even worse. The company's net loss skyrocketed from $0.8 million in 2013 to $15.2 million in 2014. It has yet to turn a profit and admitted it may never happen due to the company's commitment to social consciousness and community values.

"We have a history of operating losses and we may not achieve or maintain profitability in the future," the Etsy IPO filing stated.

The lack of profitability has shown in their recent performance. GDDY stock fell 4.1% in its first month. Etsy has plummeted 47% and is considered the worst IPO of the year.

Although their price ranges weren't justified, that's not the case for the Fitbit IPO price...

One Reason Why the Fitbit IPO Price Range Increased Today

Fitbit is one of the few tech companies that has become profitable before going public.

Fitbit's sales have soared over the last five years. They've grown from $14.5 million in 2011 to $745.2 million in 2014. It swung from a loss of $4.3 million to a profit of $131.8 million over the same time.

The company's huge returns are a direct result of its dominant market share. In the first quarter, Fitbit's products made up 85% of fitness-related wearable tech devices in the United States. Research firm NPD Group reported Fitbit has sold a total of 20.8 million devices as of March 31.

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Its early profitability and trendy products make Fitbit stock worth considering down the road.

However, we recommend waiting until after the IPO frenzy cools down. Popular IPOs can incur huge losses for retail investors because most of the initial shares are reserved for institutional investors.

"Over the years, I've seen too many investors hear about a big pop for a new issue and then go chasing those gains," noted Money Morning's Defense & Tech Specialist Michael A. Robinson. "But the pre-IPO 'insiders' very often want to sell into the rally. You don't want to become the person who buys at the top."

The Bottom Line: The Fitbit IPO price range is a good match for the company's large market share and strong profitability. But we recommend not investing in the Fitbit IPO due to the huge risks new offerings pose to retail investors.

Follow us on Twitter at @AlexMcGuire92 and @moneymorning to stay on top of the biggest Fitbit IPO news.

More on 2015 IPOs: There were more IPOs last year than any year since the height of the dot-com era in 2000. The tech sector is poised to dominate again as massive startups like Uber and Snapchat are rumored to go public. Here are 15 tech IPOs that will explode onto the market this year...