SONO

Sonos, Inc.

14.69
USD
0.75%
14.69
USD
0.75%
13.67 35.46
52 weeks
52 weeks

Mkt Cap 1.85B

Shares Out 125.77M

Chat
Send me real-time posts from this site at my email

Why Sonos Stock Crashed 25% This Afternoon

What happened Shares of Sonos (NASDAQ: SONO) cratered this morning after the popular speaker maker reported a big sales miss last night (but an earnings beat) -- and a key executive's resignation. Analysts had predicted Sonos would report $0.07 per share in pro forma profits for its fiscal third quarter and $423.2 million in sales. But while Sonos exceeded the profits prediction with a reported $0.19 per share, its sales came in well below estimates at just $371.8 million. And now Sonos stock is down 24.8% as of 2:25 p.m. ET. So what Analysts had expected Sonos' revenue to rise at least somewhat in Q3, but revenue slipped 2% instead. Adding to the bad news, the company's per-share profit was only of the pro forma variety -- and one-third less pro forma profit than it reported in fiscal Q3 2021. Moreover, when calculated according to generally accepted accounting principles (GAAP), Sonos only broke even for the quarter with a per-share profit of $0.00 -- down from $0.12 a year ago. And the company's free cash flow was negative. Sonos blamed "the dollar's appreciation and high inflation" for its poor showing in Q3, saying these factors "adversely affected consumer sentiment globally." Management further warned that these issues will continue to affect its results in the final quarter of this year. Perhaps not wanting to wait around and try to navigate these troubled times, CFO Brittany Bagley has decided to leave the company on Sept. 1. She'll be replaced by current Chief Legal Officer Eddie Lazarus on an interim basis. Now what Management is now guiding investors to expect its fiscal 2022 revenue will be no more than $1.76 billion, up only 1% or 2% from last year. That's potentially even worse than the results just reported, which cost Sonos 25% of its market cap. The good news is that gross profit margins on that revenue are holding up, with management only tightening its projected range to about 45.8%. The bad news is that unless conditions improve in unexpected ways, Sonos is now telling investors to expect these sales and margin trends to persist "beyond FY2024." So what does that imply for investors? While management didn't say this outright, it does seem that analyst projections for Sonos growing its profits 27% in fiscal 2023 now seem bleak. Low single-digit sales growth and static profit margins simply don't add up to much of a chance of growing bottom-line profits by double digits. Thus, even if Sonos looks reasonably priced at a trailing price-to-earnings (P/E) ratio of 23 today, chances are the valuation isn't quite as good as it looks. Investors selling Sonos stock today, I fear, are making the correct call. 10 stocks we like better than Sonos Inc When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Sonos Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sonos Inc. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue