At one point during trading Thursday, Fitbit (NYSE: FIT) stock was up 8% on speculation that a China-based firm called ABM Capital had submitted a bid to acquire the fitness tracker for $12.50, equal to a $2.8 billion offer. However, as some investors had suspected would happen when the rumor first broke, Fitbit has categorically denied any such offer was received.
Unfortunately, the bogus acquisition filing wasn’t the first time shady investors have misused the SEC notification process to artificially boost a stock price — albeit briefly — to cause a buying spree. Fitbit responded to the rumors saying, “Fitbit has not received any communication from ABM Capital, or any other firm, regarding a reported offer.”
The bogus Fitbit SEC filing gets even stranger. After doing some legwork, Financial Times journalists determined that while the Chinese address listed does exist, the phone number no longer works, assuming it ever did. In yet another odd twist, the ABM Capital name also pops up for a company located in North Carolina, and its phone has also been disconnected.
As if the dismal quarterly earnings Fitbit released on Nov. 2 — in which its $503.8 million in revenue underwhelmed both analysts and investors, gross margins were squeezed, and per-share earnings of $0.19 after accounting for one-time charges was a 21% decline compared to last year’s $0.24 — weren’t enough.
Co-founder and CEO James Park then added insult to shareholders’ injury by asserting, “We continue to grow and are profitable, however not at the pace previously expected.” Their salvation certainly won’t come from pseudo-suitor ABM Capital.
Tim Brugger has no position in any stocks mentioned.
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