Its been a fantastic few weeks for investors in Fitbug (LSE: FITB), with shares in the seller of fitness devices rising by a whopping 320% in the last week, and an incredible 5272% in the last month.
The key reason for their very recent gains has been a deal struck with Samsung, with the electronics giant agreeing to include the companys KiQplan digital coaching product on its Digital Health platform. The agreement could help to improve consumer awareness of Fitbug and, with the company offering additional features that are exclusively available to Samsung customers (such as a 12-week plan called Fit+Healthy), the move could help to build brand loyalty among Samsung customers.
In addition, shares in Fitbug have also benefited in recent weeks from the stocking of the companys products in Sainsburys, as well as in Target stores in the US. With such major retailers getting on board, the market clearly believes that Fitbug could have a bright future, and more major retailers could follow their peers and begin to stock the companys products.
Clearly, wearable technology devices such as those sold by Fitbug have huge growth potential. Furthermore, when they are combined with a focus on health and wellbeing, it could prove to be a potent mix and, in this respect, Fitbug seems to have superb potential.
In addition, a glance at Fitbugs offering confirms that it could develop a niche product. Thats because it offers the same features as more expensive options, such as those sold by Nike, for a fraction of the cost. So, Fitbug could carve out its own segment in a fast-growing industry and make health-focused wearable technology devices much more accessible for consumers. This could be hugely beneficial to investors through a higher share price.
Of course, Fitbug remains a company that has no revenue and is therefore impossible to value. Furthermore, the chances of the companys share price continuing its rise at the same pace are slim. After all, it has struck multiple deals with major corporations and, while others may follow, they are unlikely to cause such a dramatic rise in the companys share price in the short run. Thats because further success appears to now be priced in, with the market seemingly anticipating sales figures to impress over the near term.
Although wearable technology focused on health and wellbeing is undoubtedly an industry with vast potential, whether Fitbug can tap into that growth is yet to be tested. As a result, Fitbug remains a very high-risk play, with its share price set to remain volatile until data regarding its sales comes through. As such, prudent investors may wish to wait for evidence of its success especially after a period of such strong share price growth before buying a slice of the company. After all, patience has never lost anyone any money.
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Peter Stephensowns shares in J Sainsbury. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.