Shares in Fitbug are up by more than 50% today after the company announced an expanded agreement with online retailer Amazon (NASDAQ: AMZN.US). The deal will see Amazon extend its range of Fitbug products to include Kiqplan (its 12-week coaching system), with the two companies also agreeing a marketing programme for the New Year.
The marketing plan could prove to be highly significant for Fitbug, since it is aiming to take advantage of a potential surge in demand from people wishing to improve their health and wellbeing as part of a New Year’s resolution.
In addition, another other US retailer, Target, has also agreed a January marketing plan to promote both the Orb wearable device and Kiqplan propositions, which will feature digital marketing as well as in-store support. Meanwhile, Bestbuy.com will also begin to sell Fitbug’s Kiqplan and Orb products as part of its wearable range from January onwards.
The updated deal between Amazon and Fitbug is perhaps the most important, since it means that the latter’s products are available to arguably the widest possible audience. Furthermore, the agreement of the marketing plan with Amazon will scale up Fitbug’s offering and, as a result, Fitbug expects it to positively impact sales moving forward, which is perhaps the main reason why the company’s share price is showing such strength today.
Clearly, today’s news has significantly shifted investor sentiment in Fitbug following a brief period where the market appeared to cool in its view of the company’s future. As such, Fitbug’s share price is still around half of the level it was as recently as one month ago, which indicates just how volatile shares in the health and wellbeing company can be.
Of course, such volatility is to be expected, since Fitbug is very much at the beginning of its journey as a business. While today’s updated deal with Amazon is undoubtedly hugely positive for the company, it now brings even more expectation regarding the delivery of sales. In other words, impressive sales numbers now appear to be priced in to Fitbug’s valuation and, if they do disappoint in the New Year and fewer people turn to Fitbug’s products than expected, then sentiment in the stock could decline considerably.
So, while today’s updated deal with Amazon (and new agreements with Bestbuy.com and Target) are great for Fitbug, it may be worth waiting to see whether the company can now deliver on its potential before buying a slice of it. After all, the next few months are crucial for the business and, with its shares being up 50% today and 1157% for the year, nothing but success seems to be priced in at the present time.
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