Symbotic (NASDAQ: SYM) stock price has done as I predicted a few months ago. In my article in February, I estimated that it would drop to about $39.40, which happened in April. It has now remained in a tight range as the focus shifts to its quarterly results scheduled for Monday this week.
Valuation concerns remainSymbotic is a leading company that is seeking to benefit from the ongoing trends in e-commerce around the world. It is an Ocado competitor that is building warehouse automation technologies for companies like Walmart, Albertsons, Target, and AFS.
Companies using Symbotic benefit from low operational costs, increased automation, and higher throughput. That explains why companies like Walmart can deliver their products to customers within a few hours.
Symbotic’s business has been growing at a fast rate in the past few years. Its annual revenue has surged from over $92.1 million in 2020 to over $1.1 billion in the last financial year.
Analysts believe that it has more room to grow as it continues to sign more deals with other retailers. The expectation is that its annual revenue will hit $1.74 billion this year followed by $2.5 billion in 2025.
This growth explains why Symbotic has some of the biggest valuation multiples in the industry. It has a market cap of over $24 billion, giving it a trailing price-to-sales multiple of over 21, which is not cheap.
Like Ocado, Symbotic is also growing at a significant cost, which explains why it has remained in the red for years. It had a net loss of $23.9 million in the last financial year. Its net loss in the past five years stood at over $437 million. Talking about its profits, the CFO noted that:
“In terms of the longer-term profitability, we continue to be on a trajectory to improve, and you’re going to see that start to improve in the second half of the year and year-over-year, continued improvement in our profitability.”
Symbotic’s pricey valuation is mostly because of the quality of its customer base, strong revenue growth, and its recurring revenues. It also has a huge revenue backlog of over $23 billion.
The next important catalyst for the SYM stock price will be its financial results set for Monday. Analysts expect its revenue figure to come in at $412.9 million followed by $447 million in the current quarter.
Symbotic stock price forecast
The daily chart shows that the SYM share price peaked at $64.20 in July last year. It has now dropped by over 36% from its highest point, meaning that it is in a deep bear market.
The stock is oscillating at the 200-day Exponential Moving Average (EMA) and is slightly below the 38.2% Fibonacci Retracement point. It has also moved below the key level at $47.20, its highest swing in October last year.
Therefore, the outlook for the stock is bearish ahead of earnings since it is still priced to perfection. If this happens, the next point to watch will be at $30.5, its lowest swing on November 13th. This price is about 26% below the current level.
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