More Squawk From Jim Cramer: Fitbit (FIT) Stock Decline Caused by Unnecessary Q2 Outlook

Jim Cramer explains that if Fitbit (FIT) stops giving quarterly earnings guidance, the stock would perform better.

Author:: Amanda Gomez
Publish date:: May 5, 2016 1:10 PM EDT

Updated from 11:30 AM EDT

NEW YORK (TheStreet) -- Fitbit (FIT) - Get Report stock is retreating 16.43% to 14.29 in afternoon trading on Thursday after the fitness tracker maker issued 2016 second quarter earnings guidance that was significantly below Wall Street estimates. Fitbit expects to report earnings of 8 cents to 11 cents per share for the quarter, while analysts were estimating 26 cents per share.

"They don't know how to forecast," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning, urging CEO James Park to operate the business as a public company and "play by the rules."

Cramer questioned why Fitbit issued a weak second quarter outlook, but raised its full year earnings guidance to $1.12 to $1.24 per share from $1.08 to $1.20 per share.

In February, the company announced first quarter earnings guidance of 2 cents per share, but Fitbit reported earnings of 10 cents per share for the first quarter, which also beat Wall Street estimates of 3 cent per share.

"They make a good device," Cramer observed. "The device sells well and it's changing the health industry."

When it comes to guidance though, "they are shooting themselves right in the Surge," Cramer commented, referring to one of Fitbit's fitness trackers.

"If they had not giving a quarterly forecast last time, or this time... then the stock probably would be higher," Cramer explained in the video, above.