$FIT is off almost 10% on news that Aetna is reimbursing policy holders for purchasing Apple Watches due to studies showing owning an Apple Watch improves health.
“Beginning this fall, Aetna will make Apple Watch available to select large employers and individual customers during open enrollment season, and Aetna will be the first major health care company to subsidize a significant portion of the Apple Watch cost, offering monthly payroll deductions to make covering the remaining cost easier.”
EDIT: As I published this OA posted $FIT as a buy.
Maybe this was a masterstroke by Apple to jump ahead in the health wearables game. The Apple Watch has not exactly been flying off the shelves. With Apple’s cash hoard they can easily put down a competitor like Fitbit and this would be a way that is aligned with Apple’s culture of not competing on price. The price of the watch to Aetna is not disclosed. Apples gains a huge user base for their ailing product and now they can push out a competitor.
It’s not all doom and gloom for Fitbit. They have an agreement to supply watches to Target:
The difference? Target and its employees are funding their purchases. Aetna is the first major U.S. insurer to pick up the tab, turning it into a big win for Apple. And, if this becomes the new norm, it’s going to turn into an even bigger win for the consumer-tech company.
Again, pointing to Apple subsidizing the Watch to Aetna to secure the win over Fitbit. Aetna is not picking the most expensive wearable in this race.
And then there’s this:
Why would Aetna opt for novelty technology that also performs some basic health-related functions over a more cost-effective tool built from the ground up to monitor and improve health? It simply looks bad.
The answer is apps.
The Apple watch, when in sync with an iPhone, can provide several tools, all aimed at assisting users to live healthier. In so doing, one of the biggest flaws of the Fitbit wearable (and hurdle for FIT stock) comes to light. That is, at the end of the day it’s just an activity tracker, whereas Apple’s smart device is a true assistant that can improve outcomes even beyond monitoring.