Check out the latest Fitbit earnings call transcript.

One of this young year's surprising winners is Fitbit (FIT). The pioneer of wearable gadgetry has risen 19% so far in 2019, paving the way for what could be its first full year of trading with a positive return.

Fitbit has been a bag of hurt for its shareholders since going public at $20 four summers ago. The shares initially rallied, but the stock has clocked in with double-digit percentage slides in its first three full years on the market. 

  • 2016: Down 75%
  • 2017: Down 22%
  • 2018: Down 13%

Waning consumer interest in its once-trendy fitness trackers and an initially lukewarm result to Fitbit's push into smartwatches have weighed on the shares, but momentum may finally be on its side. Let's take a look at what is driving Fitbit's revival. 

Julianne Hough jumping rope wearing a Fitbit bracelet.

Julianne Hough sports a Fitbit. Image source: Fitbit.

Keeping up the pace

There were several moments through 2018 when it seemed as if Fitbit was finally ready to shift out of reverse, and the biggest catalyst came on Halloween, when the wearables bellwether served up a blowout financial report. Revenue rose a mere 0.3%, but it broke a sorry streak that consisted of seven consecutive quarters of year-over-year revenue dips. Wall Street was expecting the streak to stretch to eight financial reports with negative top-line growth. 

Analysts were also bracing for a small quarterly deficit, but Fitbit surprised them with a modest profit for the period. Folks angling for more active lifestyles didn't return to Fitbit's fitness-monitoring bracelets. The real sales turnaround came from Fitbit's second run at the smartwatch market, this time pricing its wrist huggers more competitively than the runaway market leader. Smartwatch sales are now accounting for nearly half of Fitbit's revenue, up from a thin 10% slice of the top-line pie a year earlier. 

A negligible uptick in revenue and an earlier-than-expected return to profitability aren't enough to cement a turnaround at Fitbit, but the market's starting to get excited. Analysts are modeling 4% growth in revenue after a flat but profitable holiday quarter. The stock would've probably moved higher for all of 2018 if the general market hadn't corrected sharply in December, but there's no use in crying over spilled downticks. 

There's a lot now riding on the success of Fitbit's Versa smartwatch, and that's not necessarily a good thing. Fitbit dominated the fitness tracker market, but it's hard to remain relevant as a distant silver medalist in the smartwatch market. The device has helped stabilize sales growth, but sooner or later Fitbit is going to cash in on some of the health tech initiatives it's been hoping will be there to carry the baton to the next runner in this race. 

Fitbit is off to a strong start in 2019, and that's clear by its refreshingly positive stock action. Keeping the good times coming will be the real challenge, though, especially since this year's finish line is so far away.