Where the Fitbit Stock Price Is Headed in 2016

fitbit stock priceFitbit Inc. (NYSE: FIT) stock is up 38.7% during its six-month run as a public company. And our Fitbit stock price prediction shows the firm will maintain that momentum in 2016.

Investors have loved the fitness-related wearable tech company ever since its highly anticipated debut this past summer. On June 18, the Fitbit IPO raised $732 million by selling 36.6 million shares for $20 each. According to Renaissance Capital, a manager of IPO-focused ETFs, it ranks as the sixth-largest IPO of 2015 and the second-largest tech deal, behind First Data Corp. (NYSE: FDC).

The Fitbit stock price soared 47.2% during its first month on the market. It peaked on Aug. 5 at $51.64 a share - up 158% from the company's offer price.

But after hitting that high price, the Fitbit stock price has been highly volatile.

Broader market volatility due to concerns over the Chinese economy brought the Fitbit stock price down 33.2% from its high price by the end of August. The stock rebounded in September and October, and gained 17.5% in those two months. But shares cratered 29.2% in November despite a stellar Q3 earnings report. FIT stock is now down 3.4% in December.

Although it's fallen far from the dizzying highs four months ago, Fitbit is still one of the few 2015 IPOs that isn't down for the year...

According to Dealogic, Fitbit is one of only three of the top 10 largest IPOs this year trading above its offer price. In fact, Fitbit stock has seen a total return of 38.7% from its IPO price. That beats TransUnion's (NYSE: TRU) 20.1% return and makes Fitbit the best-performing 2015 IPO that raised at least $700 million.

With the Fitbit stock price up another 2.5% and trading at $28.35 today (Monday), we see shares moving much higher in 2016 for two important reasons...

Two Reasons Why the Fitbit Stock Price Will Rise in 2016

The first reason why the Fitbit stock price will see big gains in 2016 is the company's strong earnings growth.

In its first-ever earnings report on Aug. 5, Fitbit earned $0.21 per share on revenue of $400 million for the second quarter. That smashed the Thomson Reuters estimate of $0.08 per share on $319 million in revenue.

The company did it again in the third quarter when it reported earnings per share (EPS) of $0.24 on revenue of $409 million. Analysts had projected an EPS of $0.10 on revenue of $351 million.

The second reason why the Fitbit stock price will move higher next year is its dominant position in the wearable tech market compared to the Apple Watch.

Bloomberg reported Fitbit products outsold Apple Inc.'s (Nasdaq: AAPL) highly anticipated watch by a huge margin during the second quarter. Fitbit sold 4.5 million devices between April and June, marking a 162% increase from the year-ago quarter. Apple only sold 3.6 million watches during the quarter.

Fitbit retained its lead during the third quarter. Fitbit sold 4.7 million devices in Q3, which is significantly more than 3.9 million Apple Watches. Analysts have attributed Fitbit's lead to its low costs compared to the Apple Watch. After all, Fitbits cost between $50 and $200, while the cheapest Apple Watch is $349.

Its first two quarters as a public company clearly show Fitbit's edge over Apple in the wearables market. That's a good position to be in as wearable tech sales are projected to hit $20 billion next year, according to research firm IDTechEx. The growing wearable tech market is another indicator of Fitbit's bullish potential in 2016.

The Bottom Line: As the end of 2015 swiftly approaches, tech investors are wondering if the Fitbit stock price will move higher in 2016. With two impressive earnings reports in the bag and a formidable position in the wearable tech market, Fitbit is clearly growing at a confident pace. That means FIT stock is poised to see huge gains next year.

Alex McGuire is an associate editor for Money MorningFollow him on Twitter for all of the biggest Fitbit news.

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