Fitbit beats analyst estimates even as it struggles to sell its Apple Watch alternative

Bottom line: Fitbit's doing better than last year, but this doesn't mean investors see it that way. As evidenced in Apple's earnings report, people are more interested in a fully featured smartwatch, and Fitbit's latest attempts cut too many important features to be competitive. The company is aware that it needs to change its strategy, so it will focus on premium products in the coming year.

Fitbit's latest financial numbers are in, and they paint a pretty picture of healthy growth for the second quarter of 2019. And yet company shares are down 19 percent as of writing, as a result of lowering expectations for annual revenue.

The wearable maker sold 3.5 million devices in the three months ending in June, which is 31 percent more than what it managed in the same time window last year - but it only brought in $14.3 million, a mere 5 percent increase.

Fitbit chalks it down to people not being all that interested in a $160 device that is essentially a stripped down version of the Versa smartwatch it launched last year. The latter adds flash storage, a barometric altimeter, gyroscope, and Wi-Fi for just $40 more than the former. As a result, two thirds of all sales were fitness trackers announced in the past 12 months, such as the Charge 3.

When you also take into account that Fitibit was hit with tariffs last year on devices that have an average selling price of just $86, you can easily explain why the company's bottom line is not where it should be. Still, the company is bleeding a lot less money than the $118.3 million it did in the same quarter of last year, so its long term outlook isn't as bleak as it looked in 2018.

A more positive highlight of the financial report is that Fitbit's healthcare bet is starting to pay off, and is on track to deliver $100 million in revenue throughout 2019. Investors were told to expect a bit lower total revenue of $335 million, and the company says it will shift focus "back to innovation from value". After all, the company has yet to show a proper use of talent and resources it acquired from Vector and Pebble.