Fitbit's Blaze Watch Not Enough To Keep The Stock From Crashing 18%

Fitbit Inc (NYSE: FIT) shares tanked on Tuesday, falling more than 18 percent. The move may be attributed to some not-so-positive reception of Fitbit's newest product -- Fitbit Blaze, a $199 smart fitness watch that will be released in March.

The company revealed the watch at the 2016 Consumers Electronics Show in Las Vegas.

'Not Enough'

Regarding the Blaze, Sterne Agee CRT said, "Priced at $200, Blaze is $50 cheaper than the Surge GPS watch (albeit +$30-130 up-sell in bands) yet another premium-price tier nicely above FIT's still-low overall blended ASP just ~$84, which we continue to see leaving room for feature expansion."

Sterne Agee CRT sees the Blaze more as a "fashionable Charge fitness band than a big TAM expander nor net new driver of FIT's ultimate platform." The firm noted that while the Blaze is priced $120-170 less than an Apple Watch with a comparable band, "Blaze offers a much smaller fraction of the functionality, as a not-so-smart watch with limited apps platform play."

Related Link: Bob Peck Offers 10 Reasons To Be Positive On Fitbit Ahead Of Q4 Results, CES

TechCrunch noted that the Blaze is less expensive than Fitbit's Surge, "likely because Fitbit expects you to customize the Blaze with various bands, which tips the overall cost beyond that of the Surge. The Blaze also lacks the GPS built into the Surge though the watch can still track GPS data provided from a connected smartphone."

Sterne Agee CRT continues to expect a big Q4, but weaker Q1. The firm holds a Neutral rating on Fitbit's stock.

Potential Legal Trouble

Separately, consumers from California, Colorado, and Wisconsin filed a nationwide class action lawsuit against Fitbit, alleging that its Charge HR and Surge heart rate monitors do not and cannot consistently record accurate heart rates during the intense physical activity for which the company expressly markets the devices in widespread advertising.

According to a press release, "The suit contends—and expert testing confirms—that the Heart Rate Monitors consistently mis-record heart rates by a significant margin, particularly during intense exercise. Not only are accurate heart readings important for those engaging in fitness, they can be critical to the health and well-being of people whose medical conditions require them to maintain (or not exceed) a certain heart rate."

Shares closed at $24.30, down 18.3 percent. The stock had seen a nice run-up since Christmas, where it topped Apple's App Store.