Fenix timing triggers 7-day slide wiping $10 billion in value off Garmin
Garmin recently posted record revenue and raised its full-year earnings forecast. But the market didn’t like the cut to growth expectations for its Fenix line. Since the earnings call, the company’s stock has logged a seven-day losing streak, falling from $247.98 to $203.98 and erasing over $10 billion in market value.
Fitness wearables are driving the numbers
The fitness segment brought in $601 million this quarter, up 30 percent year-on-year. Garmin says that’s due to strong demand for its more advanced wearables. They didn’t name specific models, but the company highlighted the launch of the Edge 550 and 850 cycling computers during the quarter. It also mentioned the Bounce 2 smartwatch for kids, which now offers voice calling, messaging and geofencing.
The Venu 4 got a shoutout too. It’s aimed more at lifestyle users, with a new all-metal design, a flashlight and expanded health features. Garmin said the majority of people registering these devices are new to the platform.
Adventure watches lose momentum after last year’s Fenix spike
According to the earnings call transcript, the problem area was what Garmin calls its outdoor segment, which includes the Fenix lineup. That part of the business dropped 5 percent year-on-year, landing at $498 million. Last year’s Fenix 8 launch caused a spike in sales, and this year’s Fenix 8 Pro didn’t land early enough in Q3 to keep the numbers up.
The Fenix 8 Pro adds satellite and cellular support, live tracking, SO, and a microLED display – a first for Garmin wearables. But timing matters. Garmin admitted the product launched too late in the quarter to close the gap left by last year’s surge. They’ve now trimmed full-year growth expectations for the segment to just 3 percent.
Essential reading: Top fitness trackers and health gadgets
That single adjustment was enough to rattle investors and trigger a seven-day, $10 billion drop in the company’s value.
Strong elsewhere, but the focus is on flagship watches
Marine and aviation are still going strong. Aviation grew 18 percent, with sales from both OEM and aftermarket. Marine jumped 20 percent, with growth across chartplotters, audio and cartography. Garmin even launched a wellness system for horses called Blaze during the quarter. However, it’s clearly early days for that one.
Overall, the company generated $457 million in operating income, had $425 million in free cash flow and now holds $3.9 billion in cash and marketable securities. It also raised full-year EPS guidance to $8.15.
But none of that stopped the selloff. The market reaction shows just how closely Garmin’s valuation is tied to the Fenix and other high-end watch cycles.
Garmin says channel inventory is lean and well-positioned for Q4. The Fenix 8 Pro could still deliver, but it will need to make up for lost time during the holiday quarter.
Subscribe to our monthly newsletter! Check out our YouTube channel.
And of course, you can follow Gadgets & Wearables on Google News and add us as a preferred source to get our expert news, reviews, and opinion in your feeds.
Increased revenue for its more advanced wearable? As if , yes there is a good demand for advances wearable but this is because the revenue per unit sold skyrocketed , the fenix/forerunner/venu price entry point increased by a good 15/20% , while the manufacturing prices increases are negligible, (they still the oldest SoCs around , their amoled screens are behind a gen or two from the competition , cheap or missing a/r treatment for sapphire glass…) . I get, Garmin is preferring to target big pockets spenders increasing revenue per unit sold over at selling more units at a lower revenue percentage, but ihmo sooner or later it’ll come back to bite their asses as you can’t just keep pushing prices upwards.with no repercussions…
“while the manufacturing prices increases are negligible” you have no idea what their manufacturing prices are lol. Love the unearned confidence though.
Deserved. Should drop more.
After implementing a Premium Subscription for their Premium Price Watches.
I have the Fenix 7 Pro and I’ll either be going back to Apple, trying Coros, or getting a cheaper Garmin watch next – if they exist as the lower models keep going up (265 is substantially more than 245 or 255 models were). Garmin isn’t “special” at this point, even at battery life with a lot of other companies beating it. They’re implementation of satellite is lackluster as well with many phones now having an option for that.
It was long coming for Garmin. They made an astronomical increase of prices for their mid to high end watches, forgot about what made the brand special like mip displays, diluted the customer base by offering 3 or 4 versions of the same watch that at the end was catering to everyone and no one and an inconsistent buggy software that for many watched was abandoned just after a year. And the competition came out for them showing what they could’ve done but didn’t
Fenix 9 anyone?