It’s always with great trepidation I write anything that may cast a dark cloud on, among a handful of well-loved names, Fitbit Inc (FIT).

But the stock is still down more than 70% since its August-2015 peak (and only up about 17% from its February low), which shows that most of the market agrees that Fitbit stock isn’t worth owning.

[ad#Google Adsense 336×280-IA]Still, there’s a small but very vocal segment of the market that (1) still loves the premise of the company’s technology, and (2) is quick to “creatively criticize” anyone who dares point out flaws the company is unprepared to face.

If you’re in that minority crowd, all I ask is that you hear me out and give some honest thought to what I’m about to suggest regarding Fitbit stock.

Fitbit Stock’s Best Days Are in the Rearview Mirror

Calling a spade a spade, it would be easy to suggest the class action lawsuit currently being levied against Fitbit (claiming its PurePulse heart-rate monitor technology is woefully inaccurate) is a big problem. Ditto for the fact that, since Fitbit defined the market, much cheaper and almost-as-good knockoffs are starting to chip away at Fitbit’s dominance in this sliver of the wearable space.

Truth be told though, those issues aren’t the biggest threat to the company’s long-term viability. No, more than anything else, current and would-be owners of Fitbit stock should worry that consumers are already starting to lose interest in the novelty of wrist-worn activity monitors.

In other words, the fad is winding down.

Describing last year’s Fitbit-mania as nothing more than a fad is the feather-ruffling part of the discussion. Fitness isn’t a fad. It’s a lifestyle, and it never goes away. And, with more than 7 billion people populating the planet, there’s still a lot more market for Fitbit to tap.

I don’t disagree with the first half of the counterargument; being fit is usually en vogue for a big enough portion of the population to call it a respectable market. The market size of willing buyers of such wrist-worn devices, however, is not only a small subset of those 7 billion people, most of the would-be Fitbit owners already own one and aren’t apt to buy another one.

Indeed, a wide swath of Fitbit owners are already losing interest in wearing the one they have. Why buy another one to gather dust?

The specifics: Depending on who you ask, 30% to 50% of activity monitoring watch owners stop using them within a few months of acquiring them.

Lower prices might — and I stress might — open the net wider to attract the next tier of the audience. But, if the consumers who paid a premium price for a top-of-the-line device are already abandoning them, doesn’t it stand to reason the rest of the market recognizes they too would lose interest pretty quickly, regardless of the price paid for the device?

That’s not say there’s not some sort of perpetual market now established for the devices. But the plausible market for a high-end device (and “plausible” is the key term here) like the Fitbit was never going to be as big as the hype surrounding Fitbit stock a year ago.

And there’s the source for most shareholders’ frustration, which turns into anger. See, too many investors bought into the premise of activity trackers without thinking long and hard about the long-term marketability of such devices.

It’s not unlike the rise and fall of GoPro Inc (GPRO). While few would deny that GoPro makes the world’s best action camera, the vast majority of the world has no need or desire for an action camera of any quality or price … even if it’s the best.

Sales of its devices are slowing dramatically, as the real market for action cameras approaches saturation and current GoPro owners aren’t justifying upgrades or replacements of lost or broken action cameras.

Point being, most consumers just lose interest in novelty of any ilk. Ask anyone who manufactures a 3D television.

Bottom Line for FIT Stock

Just to be clear, I’m not saying there won’t be a company called Fitbit doing business five years from now. I am saying, however, Fitbit as a company — and by extension, FIT stock — is apt to be relative disappointment in five years time.

Stick with them at your own risk, as there are no real “growth” prospects on the radar. From here, fitness watches are mostly a commodity, with limited room for actual market growth.

There’s no doubt it’s a cool product though, even if its heart-rate sensors aren’t all that accurate.

— James Brumley

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Source: Investor Place

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.