Under Armour (NYSE:UA) (NYSE:UAA), Fitbit (NYSE:FIT), and GoPro (NASDAQ:GPRO) were all terrible stocks to own over the past year. Under Armour and Fitbit were both cut in half, and GoPro plummeted nearly 40%.

At first glance, Under Armour, Fitbit, and GoPro don't have a lot in common, since they compete in different industries. But if we look just a little closer, we'll notice that these three hated companies actually share four key weaknesses that won't fade away anytime soon.

A man slumps in front a chart displaying a massive stock market crash.

Image source: Getty Images.

1. Slowing sales growth in saturated markets

When Under Armour, Fitbit, and GoPro went public, investors were dazzled by their incredible sales growth. However, that euphoria faded as their markets became saturated and their sales growth slowed.

 

FY 2014

FY 2015

FY 2016

FY 2017 (est.)

Under Armour

32%

28%

22%

11%

Fitbit

175%

149%

17%

(27%)

GoPro

41%

16%

(27%)

6%

Year-over-year revenue growth. Source: Quarterly reports.

Under Armour initially impressed investors with its high-tech fabrics and new designs, which were a breath of fresh air in a stagnant sportswear market. However, rising competition from Nike and a resurgent Adidas are now making it much tougher to maintain the company's previous growth rates.

Fitbit and GoPro were respectively the "first movers" in fitness trackers and action cameras, but new competitors subsequently launched cheaper devices. Since the fitness tracker and action camera markets remain fairly small, both markets were quickly saturated and commoditized.

2. Lack of competitive moats

Investors who are bullish on Under Armour, Fitbit, and GoPro often argue that the strength of these companies' brands give them an edge against their competitors. But as seen from their slowing sales growth, consumers are starting to regard UA as just another footwear and sportswear maker, Fitbit as another wearables maker, and GoPro as another camera maker.

That's why all three companies are trying to diversify their businesses. UA is expanding internationally and investing in wearables, connected devices and apps. Fitbit launched more wearables across different price points and acquired smaller players like Pebble and Vector. GoPro launched VR rigs and a new drone. Those are all moves in the right direction, but it's unclear if they will widen their moats enough to counter the competition.

GoPro's Karma drone.

GoPro's Karma drone. Image source: GoPro.

3. Haphazard digital expansion plans

All three companies are also trying to widen their moats by expanding their digital ecosystems, but these efforts are all fragmented and don't generate significant revenues.

Over the past few years, Under Armour acquired or developed several fitness apps, including MapMyFitness, MyFitnessPal, Endomondo, and UA Record -- which link to its connected fitness devices and its UA Shop shopping app. UA claimed that ecosystem reached nearly 200 million users last quarter, but revenue from these "Connected Fitness" products only generated less than 2% of its sales last year.

Fitbit's digital ecosystem includes the Fitbit, Fitbit Premium, and Fitstar apps, which sync with its wearable devices and Aria scale. The company claimed that active users across that ecosystem rose 37% annually to over 23 million last quarter. Subscriptions to Fitbit Premium and Fitstar respectively cost $50 and $40 per year. However, Fitbit admits that these platforms generate less than 1% of its total revenue.

Fitbit's Blaze smartwatch.

Fitbit's Blaze smartwatch. Image source: Fitbit.

GoPro's digital ecosystem includes its main apps (GoPro, Quik, Capture, Passenger), the GoPro VR app and website, and its GoPro Plus cloud storage service. The only part of this ecosystem which generates revenue is GoPro Plus, which costs $5 per month. GoPro hasn't disclosed how many people use those services or how much revenue they generate.

The key takeaway

The similarities between Under Armour, Fitbit, and GoPro indicate that companies in different industries sometimes address similar challenges in similar ways. They also teach us that companies which rely heavily on brand strength without well-diversified business models and wide moats can lose their footing very quickly. These three stocks might eventually rebound, but the aforementioned challenges could limit their upside potential for the foreseeable future.

Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Fitbit, GoPro, Nike, Under Armour (A Shares), and Under Armour (C Shares). The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.