Stifel recently downgraded Fitbit stock to “sell,” stating that the fitness tracker hasn’t innovated enough to remain appealing to buyers. The stock now has five “buy,” seven “hold,” and two “sell” ratings. Meanwhile, shares experienced a year-to-date loss of 15.5 percent.

Despite all this, Stifel does note that Fitbit could still be profitable long-term. At the moment, however, there’s no obvious road to that profitability.

Stifel, whose Board of Directors includes Thom Weisel, Kathleen Brown, and Robert Grady, has studied Fitbit closely over the years. While Fitbit was an early innovator in the field of fitness trackers, Stifel observes, it hasn’t been able to keep up with the pace of competitors and changing technology.

“The franchise and customer database does have strategic value, and the balance sheet can sustain cash burn through 2018,” wrote Stifel analyst Jim Duffy. “But absent a change in direction and sudden acceleration in healthcare system revenue contribution, we see shares lacking a catalyst.”

Immediately following Stifel’s downgrade, Fitbit share price dropped 7.62 percent.

Fitbit’s biggest challenges now involve how to remain relevant and competitive in an over-saturated market. Smartwatches have practically taken over the fitness tracker channel, for example.

Fitbit actually has an answer to this already: the Ionic smartwatch, released in August 2017. It features not only fitness tracking capabilities, but also contactless payment and music pairing options. It can also be paired with a smartphone to receive notifications from social media such as Facebook, Twitter, Snapchat, and more. Priced at $299.95, it was supposed to bolster the company’s profits.

But it didn’t catch on. Even the massive holiday rush during Thanksgiving/Black Friday/Cyber Monday didn’t help. Overstock is currently sitting in stores, awaiting an uncertain future.

Fitbit’s other new venture is serving corporate wellness plans and medical research studies. Neither of these channels has taken off yet, either.

According to Stifel, if Fitbit wants to stay in the game, it will need to continue to diversify and keep up to date on the latest technology in order to remain competitive. Without increased sales and new product lines, however, Fitbit is likely to lose its fit status for good.

Photo:  Faiz Zaki /