OK folks, this is pure speculation but there are some strange goings-on with Fossil’s share price so let me quickly outline how I put 2 and 2 together to make 4 and a half.
The first 2.
Fossil’s earnings are tanking. November 2019 saw Y.O.Y earnings down 11%. You can find analyst reports like this one from seekingalpha (and elsewhere) which point out that the outlook for the stock is bearish (not good)
Yet as Taylor at seekingalpha, and others, point out, the current Fossil share price is trading at a forward earnings multiple of 38. Basically, it has a premium price as if it were a growth stock…which it isn’t.
Another 2.
Back in November Google agreed to buy Fitbit and that was widely reported at the time including on this site.
I also reported that Facebook was supposedly sniffing around for a deal and themselves made an offer for Fitbit but they couldn’t or wouldn’t match the Google offer. That was less widely reported but covered in other sources like theverge.
2+2=4.5
In my opinion, Fossil is trading at a premium as it is either seen as an acquisition target or is being cautiously pursued by speculators on that basis. The reason being that a rebuffed Facebook could be a potential suitor as they seek to enter the wearables game through a different route.
I guess there’s some logic there, somewhat let down by the lack of in-house app & data skills compared to Fitbit
Disclaimer: Neither I nor anyone I know of has, or plans to have, any stock position in Fossil/Facebook.
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Interesting.
It would have made more sense for Facebook to buy Fitbit (Fitbit from Facebook) and Google to buy Fossil (Fossil with WearOS by Google).
That said, Facebook, with a average user age of 40, does seem like a nice platform to create a Fitbit like competitor for step tracking. Their users should also appreciate heart rate and sleep tracking.
perhaps.
it depends what google wants. if they want people to use Google Health/Fit then the fossil users already use that via WearOS. the acquisition of fitbit gives the future potential to convert all fitbit (FitOS) users to WearOS. fitbit almost certainly has more intellectual property which may interest google…not sure that fossil would have much of that.
that still begs the question to exactly why facebook would want to buy Fossil
True, they could just do what they do best and create apps for WearOS. But Facebook is a listed company, so they always looking for growth ‘via the next big thing’ to keep driving the share price up even if it does not make sense.
Also hope that Google’s tactics does not ending up pushing Fitbit users to Garmin. I like Garmin, but we need competition.
I think the best bet is just to make money from all this madness by buying some Fossil shares.