Fitbit Inc. (FIT) Stock Moves Down and Here’s Why

Fitbit Inc. (NYSE: FIT) shares rose yesterday on lower trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Analysts at Pacific Crest downgraded shares of Fitbit Inc. (NYSE: FIT) from to Sell in a research note to investors today. Pacific Crest currently has a rating of Sell on the shares. The one-year price target of $21.25 is above the opening price of $14.77, causing a fair amount of other analysts to issue statements on the company recently. Looking back over the last 52 weeks, Fitbit Inc. stock has a high of $41.97. Downgrades occur when analysts consider that the future prospects for the security have diminished from the original recommendation, usually due to an important and integral change in the company’s actions, future outlook or industry.

Meanwhile, the Dow Jones Industrial Average DJIA, +0.62% finished up 112.58 points, or 0.6%, at 18,281.03 yesterday.

The Nasdaq Composite Index COMP, +0.50% rose 26.36 points, or 0.5%, to end at 5,316.02, and is up 0.1% for the week to date.

The S&P 500 index SPX, +0.43% added 9.24 points, or 0.4%, to close at 2,159.73.

Shares of Fitbit Inc. (NYSE: FIT) opened at $14.77 yesterday and traded in a range between, $14.71 and $15.05, and last traded at $14.77, a jump of $0.05 or 0.00 compared to the previous closing price.

Fitbit Inc. (NYSE: FIT) now has a market cap of 3.28B.

Fitbit Inc.Trading Volume

The stock’s average daily volume is 8,647,330 shares out of a total float 133,592,000 and some 6,476,185 shares traded hands yesterday, below normal. Investors often use swings in trading volume to identify substantial volume aggregation or distribution by institutional investors, so look for trading volume to pick up in the coming days.

While an increase in trading for short periods will not mean much, conversely, a trend of heavy trading volume on the buy side over a series of days or weeks expresses a positive signal to market traders that institutions may be moving in, so institutional sponsorship is crucial.

Institutional sponsorship commonly refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions.

These professional investors have substantial teams of analysts researching thousands of stocks, so it is good confirmation to see them buying a stock you are researching.

Fitbit Inc. Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By identifying trends, moving averages allow investors to make those trends work in their favor and increase the number of successful trades.

Trades for Fitbit Inc. (NYSE: FIT) have ranged from $11.65 – 41.97, and the stock now has a 50-day MA of $15.27 and 200-day MA of $14.68. Today’s last price is 0.65% lower than the 52 week high of $41.97.

Earnings growth is ann important factor to research when buying stocks and investors look for companies that have been successful at growing their earnings at least 25% or more over a 3 year period.

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