Shares of Symbotic (NASDAQ:SYM) are taking a tumble after the artificial intelligence (AI) robotics company reported its earnings. As of this writing, SYM stock is down about 25%.
For the quarter that ended June 29, Symbotic posted solid revenue growth of 57.73% to $491.86 million, which beat the analyst estimate of $464.55 million. The company’s systems segment accounted for $472.11 million of the revenue. Symbotic’s net loss also improved to $14 million compared to $39 million a year ago.
These numbers were solid, although a stock’s price is based on discounted future cash flows, not past cash flows.
Guidance is where Symbotic struggled. The company guided for fourth-quarter revenue of between $455 million and $475 million and adjusted EBITDA between $28 million and $32 million. Analysts were expecting revenue of $516.84 million, meaning that the midpoint of Symbotic’s revenue missed the target by a significant 10%.
“Looking ahead, improving our deployment process may temporarily slow our revenue growth,” said CFO Carol Hibbard. “However, we expect system costs to decline and gross margin to return to historical levels during our fourth fiscal quarter.”
SYM Stock Plunges Following Earnings Report
As noted by Hibbard, Symbotic’s system gross margin took a hit during the quarter. Total gross profit was 13.7% compared to 17% year-over-year. Chairman and CEO Rick Cohen attributed the fall to extended construction schedules and implementation costs.
Wall Street was less than happy with the results, with at least six analysts lowering their respective price targets.
For example, Craig-Hallum analyst Greg Palm lowered his price target to $45 from $54, although he still believes in the company. He added that he expects Symotic to quickly fix its mistakes.
“What happened this past quarter does not change our long-term view whatsoever and based on historical execution, we expect the company will get back on track quickly,” said Palm. “As a result, we would buy the weakness in the stock.”
TD Cowen analyst Joseph Giodano expressed optimism while lowering his price target to $43 from $55. Giodano noted that nothing in Symbotic’s earnings report challenged his long-term thesis. At the same time, he believes that the company is now back in the “prove it” phase based on profit potential.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
