Motley Fool analyst David Kretzmann returns from the 2016 Consumer Electronics Show ready to share the technology world's latest and greatest advancements.
In this video segment, healthcare analyst Kristine Harjes asks him to share the most interesting development in the wearables space, and Kretzmann explains why Under Armour (NYSE:UAA) stood out to him. The athletic apparel company is making huge moves in the wearables space and leveraging up in the process -- is it worth it? Find out in this clip of Industry Focus: Healthcare.
A full transcript follows the video.
This podcast was recorded on Jan. 13, 2016.
Kristine Harjes: I know on last Friday's tech edition of Industry Focus, Dylan and Sean talked plenty about CES. They covered a little bit about wearables. What did you see, as it related to wearables?
David Kretzmann: What most interested me when it comes to wearables was what Under Armour is doing. Under Armour is a company that we follow pretty closely in Rule Breakers and Supernova. It's been a great stock in the last five or six years, it's been a wonderful performer. But over the past couple years, the company has really amped up its focus on what it called 'connected fitness,' or integrating technology into what's traditionally been an apparel company. So, over the past couple years, the company has actually spent $710 million acquiring three different connected fitness platforms, or digital apps that help people track their healthcare data.
So, MapMyFitness and Endomondo and MyFitnessPal. Under Armour spent over $700 million to acquire those three platforms, but then it wasn't totally clear how the company would monetize those platforms. Now, those platforms have over 160 million users. So, clearly, there's a lot of appeal there. People are using those platforms increasingly.
But, this week, with CES, the company launched more connected fitness products. It has connected sneakers, it has a wristband, all these different technology products that are integrated into its apparel and connected back to those connected fitness platforms. So, for me, it's still kind of a question for Under Armour, because the company went into more debt than it's ever had before to buy those connected fitness companies. And the balance sheet, for that company, isn't as strong as it was three or four years ago.
So, the company is making a huge bet on this space. This is the first step for them to monetize it. So for me, as a shareholder and someone who follows Under Armour, it was reassuring to see them taking initial steps to monetize connected fitness. But it will be interesting to see how successful they are with it, because they definitely are trying to be a leader and a pioneer in that space. And whether or not this grabs hold, I think, will have some pretty big implications for connected fitness.
David Kretzmann owns shares of Under Armour. Kristine Harjes has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.