After a sales projection cut, Sonos Inc. (SONO.O) was expected to lose more than 20% of its market value on Thursday.
Early trading saw the stock fall 22% to $16.40, reaching a five-month low and erasing all year-to-date gains. Additionally, four of seven Sonos analysts lowered their price estimates.
“While the revised guidance takes numbers lower, we have no reason to ‘call the bottom’ at this point,” said Raymond James analyst Adam Tindle.
In the face of rising borrowing rates and persistent inflation, consumers have prioritized essentials above computers, speakers, and smartphones, hurting consumer electronics makers this year. In addition, analysts stated that a pandemic surge has damaged consumer hardware industries by shifting spending from commodities to services.
Sonos predicts revenue of $1.63 billion to $1.68 billion, up from $1.7 billion to $1.8 billion. Analysts predicted $1.69 billion in annual revenue.
“Due to softening consumer demand and channel partner inventory tightening,” claimed Sonos CEO Patrick Spence. As a result, the company reduced its annual gross margin target to 44.3%–44.8% from 45%–46%. Speaker sales plummeted 24% to $241.2 million in the second quarter.
