NEW YORK (TheStreet) -- Fitbit (FIT) - Get Report stock is plunging 19.01% to $13.38 on heavy trading volume this morning after issuing weaker-than-expected guidance as the company invests heavily in new products.
After yesterday's market close, the wearable fitness device maker announced that it expects to break even or report a profit of up to 2 cents per share for the first quarter of 2016, below analysts' estimates for earnings of 24 cents per share.
Fitbit is increasing production of its new $200 Blaze smartwatch and Alta wristband despite investors' concerns about rising competition from Apple's (AAPL) Apple Watch. The two products are scheduled to ship in March.
The company's disappointing guidance is overshadowing a 2015 fourth quarter earnings and revenue beat. Fitbit reported earnings of 35 cents per share on revenue of $711.57 million for the quarter, beating estimates of 25 cents per share on $647.82 million in revenue.
When TheStreet's Jim Cramer asked Fitbit CEO James Park about the disappointing guidance in an interview on CNBC's Squawk on the Street this morning, Park claimed that Fitbit typically issues a conservative outlook, which the company has beaten for three straight quarters.
Park's optimistic tone echoed the confident narrative of Fitbit's conference call, and clashed with the numbers the company reported, Cramer noted.
"You really did give this, we're the ultimate health and wellness play, but you have to understand that Wall Street doesn't work like that," Cramer told Park. "Wall Street is about, what have you done for me lately?"
Park pointed out that Fitbit is investing heavily in marketing new products, and the best thing that the company can do for shareholders is to focus on the long-term rather than attempt to control the stock price in the short-term.
Even so, analysts at six firms have downgraded the stock as they react to the gap between Fitbit's and Wall Street's forecasts.
"You cant run a public company like that even if your product is the greatest thing since sliced bread and I have to tell you, I think it is," Cramer says in the above video.