I saw a full page Ad in WSJ from Morgan Stanley calling out their work on Fitbit IPO. One number that stood out was 23.2 trillion steps in total since the inception.
Sounds impressive especially when we hear comparatives like, “”enough to walk around the earth 350,000 times”. But what does this number mean and is it really that impressive? Why does this number matter for Fitbit’s stock performance?
The same Morgan Stanley Ad says Fitbit sold 30 million devices till third quarter of 2015. That is not enough to do a simple math of average steps per day per person. We need number of devices sold each year and an estimate of average number of months (days) they are used till date.
The recent S1 filing from Fitbit gives us the per year numbers
2012 1.279 million
2013 4.476 million
2014 10.904 million
2015 13.097 million (9 months)
Some or most of the devices bought in 2012 and 2013 likely got upgraded to newer version. And assuming higher percentage of purchases near year ends let us assume the number of months in use are 33, 24, 16 and 6 for the devices bought in 2012, 2013, 2014 an 2015 respectively.
With 30 days per month, the 23.2 trillion total steps break down to 7049 steps per day.
That is the average and its 30% below the 10,000 steps Fitbit has been convincing its users to take. There is no science behind the 10,000 steps.
We do not have access to the distribution, Fitbit does. Obviously they those not to disclose this distribution. There is a set of people who beat 30,000 steps per day. Likely these are less than 5% (if higher then the average for the rest gets even lower). So we can safely state Average Fitbit user takes 7000 (or fewer) steps per day.
Is that really higher than what we otherwise take?
Regardless, does this matter? Do these extra steps really have an impact on fitness?
Definitely this means nothing to stock performance for Morgan Stanly to quote this with such prominence.