Live

Watch CBSN Live

Did an Amazon mistake sink Fitbit’s stock?

Latest MoneyWatch headlines

An incorrect Amazon (AMZN) press release may have caused Fitbit (FIT) shares to plunge in the wake of the Christmas holiday. 

Shares of Fitbit initially rose by 7 percent the Tuesday after Christmas on news that its app was among the most downloaded in Apple’s (AAPL) App store, a sign that the fitness tracker must have been a popular holiday gift. It was a welcome boon for the struggling company, whose stock got slammed 75 percent lower in 2016.

The very next day, however, the stock was back in the red and the previous day’s gains erased. 

What happened? While it’s hard to pinpoint the precise downfall of a stock, the only bit of Fitbit-related news that garnered any sort of pessimistic reaction was linked to Amazon.

On Dec. 27, the online retailer sent out a press release detailing its top-selling holiday gifts. Two nearly identical versions were made available: one on the company’s website and another on BusinessWire.com.

Fitbit CEO on new products and industry competition

The BusinessWire version listed Garmin (GRMN) as the top-selling company in the wearable field, and makes no mention of Fitbit. The version on Amazon.com, however, lists Fitbit as the top-selling company.

During late afternoon trading hours on Dec. 27, CFRA analyst Scott Kessler cited the BusinessWire version and poured cold water on the stock’s post-Christmas rise:

“FIT was not mentioned in Amazon’s press release highlighting the best-selling wearable technology products on Amazon.com, specifying a Garmin fitness band and a Garmin smart watch.”

Kessler issued a “hold” rating on Fitbit stock. His opinion made headlines in several financial articles that all pointed to Fitbit’s seemingly lackluster performance on Amazon as another reason to further doubt the ailing stock. Shares of Fitbit ended Wednesday, Dec. 28 down 5 percent.

But Amazon’s information was wrong. CBS News has confirmed that the BusinessWire press release was incorrect and that Fitbit was indeed the top-selling wearable on Amazon, as currently detailed on its website.

“Since issuing the press release, we discovered that we inaccurately reported the best-selling Wearable Technology products for the 2016 holiday season,” an Amazon spokesperson told CBS News. “The actual list of best-sellers is as follows: Fitbit Charge 2 Heart Rate + Fitness Wristband, Fitbit Alta Fitness Tracker, Fitbit Blaze Smart Fitness Watch, Fitbit Flex 2, and Garmin Vivofit Fitness Band.”

As of this writing Amazon has yet to fix the mistake in the BusinessWire release. Amazon declined to respond to questions about how the mistake was made or why a correction has yet to be issued.

Is Apple killing Fitbit?

Kessler, meanwhile, was made aware of the discrepancy and dutifully released an updated opinion on Fitbit Tuesday, acknowledging Amazon’s error while maintaining a “hold” rating.

“We think FIT’s holiday season performance, as indicated by Amazon and Apple’s App Store and the Google Play store, was strong,” said Kessler in a research note. “However, were are (sic) not sure how sustainable this momentum will be, given the significant competitive pressures we see from many, including Chinese manufacturers.” 

Kessler told CBS News Tuesday he was surprised that Amazon hadn’t corrected its mistake.

“What struck me as most odd about this was not that a mistake was made but that it wasn’t really acknowledged and that a week has gone by, and it’s still the case,” said Kessler. “It’s definitely an usual situation as far as I’m concerned.”

Despite being the market-leader in fitness wearables, Fitbit faces serious questions about its growth in the face of competition from Apple and others. Investors will keep a close eye on Fitbit’s fourth-quarter earnings to see precisely what shape the company is in. 

But at least for today, they’re apparently optimistic again: Fitbit shares climbed nearly 8.5 percent, or 62 cents, to close the first day of trading in 2017 at $7.94, back where they were last Wednesday before bottom fell out.

View CBS News In