Fitbit Inc (FIT) Stock Price Tanks over Plan to Sell Additional Shares  

The stock price of Fitbit Inc (NYSE:FIT) plummeted more than 8% to $37.20 per share during the extended trading on Monday despite reporting strong earnings for the third quarter.

The company’s stock was negatively impacted by its announcement regarding its proposed public offering of additional Class A common stock.

Fitbit additional stock offering

Fitbit plans to sell additional seven million shares while its selling stockholders intend to offer 14 million shares.

Fitbit also stated that the underwriters of its initial public offering (IPO) in June agreed to release restrictions on the sale of approximately 2.3 million shares by employees and consultants effective Wednesday.

Fitbit said it is offering additional shares to increase financial flexibility, obtain additional capital, facilitate an orderly distribution of shares for the selling stockholders, and to increase its public float.

According to the company, it will use the proceeds from the primary portion of the offering for working capital and for other general corporate purposes including research and development, sales and marketing activities.

The lock-up period on as much as 10% of Fitbit’s common stock, options and restricted stock units are set to expire following the release its fourth quarter financial results.

Fitbit third-quarter financial results

Fitbit posted better-than-expected financial results for the third quarter. The company said its earnings were $0.19 per share, higher than the $0.10 per share expected by Wall Street analysts.

Fitbit achieved a 168% increase in revenue to $409.3 million, above the $359 million consensus estimate.

Fitbit co-founder and CEO James Park said, “Fitbit’s third quarter results demonstrated the continued rapid growth of the Fitbit platform and our team’s ability to execute on the tremendous opportunity we see globally, as we help people reach their health and fitness goals.”

The company sold 4.8 million connected health and fitness devices during the quarter.

Business outlook

Fitbit expected to achieve non-GAAP earnings in the range of $0.20 to $0.25 per share and revenue of around $620 million to $650 million during the fourth quarter.

For the full year, the company expected to deliver non-GAAP earnings between $0.92 and $0.96 per share and revenue in the range of $1.77 billion to $1.80 billion.