Why Symbotic Stock Is Plunging Today

Warehouse automation specialist Symbotic (NASDAQ: SYM) reported quarterly results that beat or matched Wall Street expectations, but investors wanted more. Shares of Symbotic traded down more than 20% as of 10:30 a.m. ET as the market ponders whether the stock has gotten ahead of results.

A good quarter, but was it good enough?

Symbotic shares entered earnings season red hot, up about 240% in the last 12 months on excitement about the company’s suite of robotics and warehouse automation products.

The company reported a loss of $0.02 per share in its fiscal first quarter ended Dec. 30, beating Wall Street’s $0.06-per-share loss estimate, on revenue that matched expectations at $368.45 million. Revenue was up 78% year over year, and the company’s cash balance increased by $129 million from the previous quarter to $677 million.

“Fiscal year 2024 is off to a solid start with strong financial and operational results. I am pleased with the trajectory and goals we have planned for the rest of the year,” CEO Rick Cohen said in a statement. “We will continue to innovate and build deployment capacity to support growth and increased profitability for our stakeholders.”

But Wall Street apparently wanted more. Though the company matched expectations for revenue, in previous quarters it had posted a substantial beat, which could have led to unreasonable expectations coming into this report. And Symbotic’s guidance for between $12 million and $15 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) in its current fiscal quarter is a little below consensus.

At least five Wall Street analysts lowered their price target for the shares after earnings, though all five kept their buy or buy equivalent ratings.

Is Symbotic a buy after its post-earnings plunge?

Even with the move lower Symbotic is still up 160% over the past year, and with an annualized run rate of about $1.5 billion in sales the company’s $22.4 billion market capitalization arguably has a lot of future growth priced in. Despite the decline, there isn’t much of an opportunity to go bargain hunting here.

That said, the revenue growth is indeed impressive. Symbotic is forecasting nearly 15% sales growth from one quarter to the next at the top end of its guidance, meaning the company is making progress growing into that valuation.

It is quite possible the EBITDA weakness forecast in the second quarter is more a product of the timing of new contracts, and the guidance could prove to be conservative.

For investors interested in Symbotic, the buy thesis coming into earnings season is unchanged. But the report if nothing else is a reminder of the volatility that comes with red-hot stocks, and a warning for those who are uncomfortable with dramatic price moves.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Symbotic Stock Is Plunging Today was originally published by The Motley Fool