The holiday season was reportedly not as good as hoped for the fitness tracker and smartwatch maker.
Fitbit layoffs appear to be on the way despite the fact that the company maintains its position at the top of the wearable technology market. The company has announced that its fourth quarter results for 2016, though strong, missed Wall Street’s predictions.
As a result of those results, it will be laying off between 5 percent and 10 percent of its total workforce.
The company’s board voted that the Fitbit layoffs were among the best ways to cut costs. The effort is required in order to cut $200 million from the company’s expenses. Even before the announcement was made, this week, reports were already circulating that the hugely popular smart, connected fitness bands and smartwatches had not lived up to the holiday hype.
This has occurred at the same time that Fitbit has managed to hold on to a very powerful lead in the wearable technology market. When it comes to fitness trackers, the brand still holds a 75 percent market share.
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The main challenge leading to the Fitbit layoffs has to do with the struggle associated with growth.
As much as Fitbit may still be leading the market, it has not kept up with the speed of growth investors and analysts had forecasted. In 2015, when the company first went public, its stocks were worth $20 per share. At the start of this week, it had fallen by 9 percent to $6.57.
This is not the first time that Fitbit has faced considerable struggles. That said, it has since been moving explosively forward. From 2014 to 2015, the company saw a doubling of its holiday season sales. However, at the beginning of the most recent holiday shopping season, Fitbit was already facing challenges. By the close of that quarter, it was clear that it was not going to pan out to be the gift giving season forecasted for them.
The Fitbit layoffs may not be a complete surprise to everyone in the industry. The company had already announced that it would not see very much growth during the fourth quarter. When it didn’t live up to those expectations, cost-cutting actions became a requirement.