Some companies don’t get it right the first time. Wireless and home speaker manufacturer Sonos (NASDAQ:SONO) just reported its first quarterly numbers as a public company. They didn’t live up to expectations. Sonos stock dropped.

That really isn’t that big of a deal. Plenty of companies don’t have great debuts on Wall Street, and/or flop after their first earnings reports. That doesn’t mean all of those early failures remain duds forever. Instead, there are a bunch of companies out there who have turned rough starts on Wall Street into long-term success stories. Look no further than Facebook (NASDAQ:FB).

But, I don’t think that is the case with Sonos stock.

Looking at the numbers, the trends and the industry, I’m not really seeing anything I like about Sonos. Revenue growth is slowing and actually declined last quarter, while gross margins are falling back. The trends in this industry are slow declines in home theater, and robust growth in wireless speakers. But, as the industry shifts toward wireless speakers, Sonos starts to compete head-to-head with some massive tech giants who have structural advantages.

Thus, I don’t think Sonos stock is due for a bounce back any time soon. Instead, I think the most likely outcome at this point in time is for this company to follow in the footsteps of other IPO unicorns in the easily commoditized consumer hardware space: GoPro (NASDAQ:GPRO) and Fitbit (NYSE:FIT).

The Numbers Aren’t Good for SONO Stock

The biggest problem with Sonos stock is that the numbers just aren’t good.

Over the past four years, revenue has grown at a 20%-plus compounded annual growth rate. But, growth is slowing dramatically. Last year, revenues were up just 10%. Two quarters ago, they were up just 2%. Last quarter, they were down 7%.

In other words, the trend is not you friend here. Moreover, gross margins are dropping back, and the one area where Sonos has a nice competitive advantage (home theater) fell back by more than 20% last quarter.

That doesn’t make much sense. The smart speaker market is booming, and this is where Sonos is supposed to be making a killing. But, as opposed to making a killing, Sonos is getting killed. You have declining and slowing revenue growth. You have gross margin compression. And, you have whole segments of the business that are under tremendous pressure. Yet, Sonos stock still trades at over 1X forward sales.

In other words, the numbers don’t really add up here. Instead, they imply that something is structurally wrong with operations and the long-term growth narrative.

Sonos Could Be the Next GoPro or Fitbit

If you dig deeper, it isn’t hard to understand why the numbers aren’t that good.

Sonos makes speakers. So do a lot of other companies, including tech behemoths Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Apple (NASDAQ:AAPL). There really isn’t any moat defending Sonos against those big competitors. The company makes all of its money from selling hardware products. Importantly, unlike success story Roku (NASDAQ:ROKU), the company doesn’t have a software business to help establish a competitive advantage over peers and let its hardware business become an afterthought.

Instead, much like GoPro and Fitbit, Sonos is exclusively a niche consumer hardware company. Also much like GoPro and Fitbit, Sonos is competing against the biggest, baddest companies in town. And, again like GoPro and Fitbit, Sonos isn’t profitable.

Thus, while I don’t want to write off SONO stock as the next GoPro or Fitbit just yet, I do think that current signs indicate the most likely future for this company is that it gets squeezed out by big tech players who have their own smart speakers. In such an event, sales could drop, and the valuation could tumble (GPRO and FIT trade at under 1X trailing sales), a dynamic which could lead to a dramatically lower share price for SONO stock.

Bottom Line on Sonos Stock

This company’s first earnings report as a public company was not good, and slowing revenue growth in what is supposed to be a red-hot market implies that Sonos stock could be following in the footsteps of other niche consumer hardware companies like GoPro and Fitbit.

As of this writing, Luke Lango was long FB, AMZN, GOOG and AAPL.