Fitbit shares lower despite earnings beat
Fitbit (FIT) reported quarterly earnings that beat analysts’ expectations on Monday. But shares plunged after the company announced that “certain stockholders” are proposing to sell 14 million shares in a follow-up public offering.
The wearables company reported third-quarter earnings of 24 cents per share on $409 million in revenue. Wall Street had expected the company to deliver 10 cents per share on $352 million in revenue, according to consensus estimates from Thomson Reuters.
Shares, however, fell more than 7 percent in extended-hours trade.
Fitbit said on Monday it intends to do a follow-on public offering of a proposed 7 million shares of its common stock, while certain shareholders were proposing 14 million shares.
“The principal purposes of the proposed offering are to increase Fitbit’s financial flexibility, obtain additional capital, facilitate an orderly distribution of shares for the selling stockholders, and increase Fitbit’s public float,” the company said in a statement.
Fitbit said it will use the cash as “additional working capital” for marketing, research and capital expenditures.
The company’s revenue nearly tripled in the third quarter, helped by strong demand from markets outside the Americas.