$FIT FitBit Goes Public (And No One Seems To Mind)
Last week, FitBit stock started trading on the New York Stock Exchange at $30.40 per share, 52% higher than the price of the initial public offering (IPO) price of $20.00. (Source: CNBC.com) The stock closed on Friday June 20, 2015 at a price of $32.50 after reaching a high of $33.95 in less than two days of trading.
As I listened to the business media reaction to the IPO, I could not help but notice the lack of negative sentiment. FitBit is already profitable, shushing the usual nay-sayers. The price action was also strong, which makes investors happy about it, and gives the media something positive to broadcast. And much like the FitBit product line, there were two distinct camps: those who love it, and those that simply don’t care (instead of the more common ‘love it or hate it’ division on Wall Street when it comes to IPOs.)
So, if the stock is anything like the FitBit product line, and its ‘fit’ community, then Wall Street may continue to see the love grow on $FIT next week, as the rest of the market deals with its 2015 mood swings.
Why $FIT Smells A Lot Like $GPRO $RWLK and $LOCO
$FIT FitBit is what I like to call a “West Coast Stock”. Not only is it headquartered in San Francisco, CA, but it also has a certain “tech appeal” that resonates in the hearts of what I call “West Coast Investors”. Notice that the word investor is included in the quotes. An example of a West Coast Investor might be a current or former Facebook employee who has a lot of extra money and is looking to “invest” into the next Facebook ($FB) or Tesla ($TSLA) or Chipotle Mexican Grill ($CMG).
Since these West Coast Investors are early adopters of technology, and usually made their money on some form of technology, they also tend to invest into (chase) other technology stocks like GoPro ($GPRO), Gogo ($GOGO), or ReWalk Robotics Ltd ($RWLK) which is not located on the west coast, or even in America, but I still considered it a “West Coast IPO”. ReWalk makes medical exoskeletons, and since a lot of people on the West Coast are gamers, and/or work in the video game industry, I think there was a video game / robot virtual connection, which pushed the stock up over $43 dollars per share. It settled Friday at $11.86, and I am sure there are lots of disgruntled folks who bought in much higher, and have decided to hold their shares as a long term investment.
Similarly, $LOCO had a strong IPO before shares topped out at their 52 week high of $41.70. Its price is now $21.45 per share. GoPro ($GRPO) got as high as $98.47 per share, before falling back to below $40 pps. $GPRO closed this week at $57.97. These momentum plays are subject to quick pullbacks after their initial run-up, which also illustrates that they are “overbought” by West Coast Investors who may also be learning to “trade”, getting stopped out on the red market days, only to see the stock recover again. This causes them to regret their sell, and so buy in again at the highs, driving the pps higher and higher until it can’t take any more. The Wall Street analysts set their price targets lower, the bears emerge, and the momentum shifts drastically downward.
My hypothesis continues: I think that Wall Street is somewhat disconnected and late to the party on many of these “West Coast” IPOs, maybe because they have never eaten at El Pollo Loco, but more likely, they don’t understand the “West Coast Investor” attitude. I don’t think they realize how much “fun money” is floating around Silicon Valley right now, and how many tech-centric thirty-somethings are jumping into the stock market, day trading on their cell phones based on overall uptrends in technology, or buying shares based on something they read on Twitter five minutes ago.
My theory is that the typical “west coast investor” doesn’t have more than a year or two experience with stocks; but since they have much more access than previous generations, and are more comfortable with transactions over the internet, they dove into the stock market head first, tablet in hand, and have since rode the tech sector trend upwards. Many “west coast investors” have taken huge losses because of their inexperience and devotion to the momentum stocks they purchased, but since they get paid so much, they don’t really care. They had money to lose, and lost it, while still having some luck in the market, keeping them in it.
Which brings me back to FitBit ($FIT), and how it fits this west coast investor perfectly. Its west coast tech; its cloud; its early-adopter; and more importantly, its not getting any hate from Wall Street (yet), so I expect the love to grow on this stock this week, with a lot of buy-and-hold-ers who may easily turn into bag-holders as the momentum eventually shifts. The top is always hard to predict, (but not as hard as asking a FitBit user to give up their device: check out this post I wrote over a year ago, about how FitBit and other wearable tech can be very addictive.)
In full disclosure, I currently hold a very small position in $FIT. I am currently bullish, but I could also exit the trade this week if the charts and uptrend do not hold up. I am not a financial adviser and I am not giving a buy or sell recommendation, ever.
Why You Should Plan For Unexpected Delays
Some people say “Patience is a Virtue”. I say patience is virtual, and being patient is really more about planning. To demonstrate, let me use two examples of impatience that I witnessed this week:
First example: Since I work remotely, I needed to mail in my travel receipts and my expense report for the previous month. The post office had just opened, and there was a line of about five customers in front of me waiting to be served. A few other people came into the post office and filed into line behind me.
There was only one postal employee behind the counter, and she was being very friendly and funny, in a lightly sarcastic Boston way. One guy asked if his mail would go out that same day, she said “No, we are going to hold it for 30 days, then mail it. Just kidding, of course it will go out today!” .
The postal worker took a moment to give me a few flat-rate envelopes that I can use next time to save me some time and money. I was able to mail my receipts and get out the door in a total of five minutes. That means the postal employee was averaging about one minute per customer (including the small talk). I was impressed how much care she put into her job, but the folks in line behind me did not appreciate her:
“Why do they always have just ONE person behind the counter, I don’t know why they don’t get more people behind that counter”. Another another customer: “All I need is one stamp…. just one stamp…. why do I have to wait so long for just one stamp” She must have said it ten times. “just one stamp”. What is this, a poetry slam?
Here is a thought: maybe if that same customer bought more than “just one stamp” at a time, she would not have to come to the post office and wait in line the next time she needs to mail something? Or maybe she could buy them from a grocery store or ATM, or just borrow a stamp from a friend or neighbor, and leave the counter for folks who actually need real help! Can she really expect the Postal Service to hire more employees just so she could buy that one stamp two minutes faster?
Second example: I was staying at a hotel that offered a full service breakfast menu in their dining room, rather than the “continental” (a.k.a. crappy) breakfast all too common these days. There was only one waitress covering the entire dining room of over a dozen tables, and since she was busy taking orders and pouring coffee, she didn’t have time to clean the dirty tables. (Waiters call this bussing the tables). I sat down at a clean table, she poured my coffee and took my order within five minutes. I got my food about ten minutes later.
Another guy walked into the dining room and sat down at a dirty table, even though there were still a few clean tables left. After waiting about one minute, he grabbed a menu from the wait station and yelled “CAN I GET SOME HELP OVER HERE?” The waitress sincerely apologized, and politely explained that she was the only waitress, and he would need to wait a few minutes. Two minutes later, the irate customer stormed out of the dining room yelling “THIS SERVICE SUCKS!”. He was only there a total of three minutes; if he wanted fast food, why didn’t he just hit the D&D or the B.K. located across the street?
My theory on this guy is that he had some place he need to be, and he only allowed ten minutes for the entire breakfast. I think this is the source of impatience in the world today. That is, our schedules are generally busy, and most people never allow any extra time for the unexpected hangups. If a person has a meeting at 9am, and Google Maps tells them it will take an hour to get to the meeting, they plan to leave the house at 8am. They leave no time for traffic, stopping for gas, flat tires, or speeding tickets. They base their lives on ideal timing, and when someone (or something) messes up their perfect schedule, they freak out and yell at the world them for making them late. But if you expect the delays, you are not as quickly perturbed by them. If you “bring a big bag of patience” (a.k.a. time) , you will not run out of patience so quickly.
For me, another key to being patient is knowing what you have control over, and what you do not. The irate customer in the restaurant did not have control over the waitress’ speed of delivery, or how quickly the food was prepared. But he did have control over his morning schedule, and he could have entered the dining room ten minutes earlier. He could have sat at a clean table. He also could have ate breakfast elsewhere, or booked a hotel with continental BS buffet, where he could make his own malted Belgian waffle, and stuff his face with mini muffins as fast as he wanted.
I find that my own patience depends on if I have my smartphone and/or my tablet with me. Whenever I find myself being forced to wait (standing in line at the grocery store, doing anything at the DMV, waiting for a ferry, or standing by the luggage carousel at the airport), I pull out my phone and check my Gmail, Facebook, TweetDeck, or just play Angry Birds. Other times, I will call my mother, or shoot a text to a friend I haven’t seen in a while. If you don’t have a smart phone, try to carry a book or magazine with you. If you are spiritual person, take a moment to say some prayers. Spend a few minutes to think about your relationship with your spouse and family, reflect on the past year, or just meditate on your upcoming week.
Next time you need to be somewhere by a certain time, try to start your journey twenty or thirty minutes before you normally would, and bring something to entertain yourself during the downtime. This may be difficult for you if you are super busy person, but if you really work at it, you will find yourself getting to appointments early. You will find that you get a better parking spot, or seat on the train. You will have a little extra time to grab a coffee, use the restroom, or check your emails before the appointment. You will have time for small talk, instead of showing up late and wondering what you missed. If you do hit traffic, or have to stop for gas, you will still be on time.
When you do find yourself standing in a long line and getting impatient, consider your options. Do you really need to be in that line? Can you do whatever you were planning to do that day on another day when you have more time (and more patience)?
If you really have no control over the situation (like when you are sitting in the dentist chair, waiting for the dentist), remember that we are all human and not machines. We are not designed to run on schedule. Put yourself in the shoes of the previous patient. Would you want your dentist rushing your procedure and shoving you out the door just to make his next appointment? I can just imagine it:
“Sorry Paul, its been great seeing you, but I am late for my ten o’clock. We’ll finish up this root canal next time, mm’kay? Keep in touch!”