Diamonds and Dogs

11/1/18

Fitbit (FIT) getting in shape. The number two smartwatch maker is jumping 25% following better than expected earnings and raised guidance for the fourth quarter. Revenue rose a modest 0.3% year to $393.6 million ahead of estimates. International revenue grew 10%. During the third quarter, Fitbit sold 3.5 million wearable devices. Average selling price increased 3% year-over-year to $108 per device driven by the growing mix of smartwatches. Going forward, Fitbit could be a takeover candidate for anyone like Google that wants to compete against Apple.

Wayfair (W ) has a spending problem. Online home furnishings store Wayfair is down 12% to a five month low following earnings last night. The company missed by a wide margin even as revenue rose 42.4% year over year to $1.71 billion ahead of estimates. Customer acquisition costs had an adverse effect on the company's bottom line. Advertising was around $707 million or $196 per new customer. As one analyst put it, when customers only spend $443 a year, this seems like a rather excessive and completely unprofitable way to run a company. All the housing related stocks and companies are struggling right now with rising interest rates.