Fitbit (FIT) Stock Plunges on Share Offering, Jim Cramer Comments

Fitbit (FIT) stock is declining after the company announced it will sell an additional 7 million shares.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Fitbit (FIT) - Get Report stock is falling 6.37% to $ 38.20 in mid-morning trading on Tuesday, after the company announced it will sell an additional 7 million shares in a new offering.

The fitness tracker maker is seeking to boost its "financial flexibility" by raising capital for research and development, marketing, corporate purposes and other expenditures, Fitbit said in a statement after yesterday's market close.

Certain stockholders will also sell 14 million shares, but the company will not receive proceeds from these sales.

TheStreet's Jim Cramer, portfolio manager of the Action Alerts PLUS charitable trust portfolio, had this to say about the company in a Real Money article today: "Short interest: 41.9%. That's the number you need to think about with Fitbit..."

"What matters is that monster short position and the 21 million shares to be sold, 14 million by insiders and 7 million by the company itself," Cramer added. "That could, for the moment, eliminate the tightness in the stock that had 42 million shares outstanding going into this fabulous quarter."

Yesterday afternoon, Fitbit announced better than expected 2015 third quarter financial results.

The company reported earnings of 24 cents per share on $409.26 million in revenue for the quarter ended September 30.

Analysts surveyed by Thomson Reuters had estimated earnings of 10 cents per share on $358.77 million in revenue.

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