Symbotic Inc. (SYM), a leading robotics and automation company, saw its stock plummet by nearly 40% on Wednesday, following an announcement that it would require additional time to file its annual report.
The company cited “material weaknesses” in its financial reporting controls and revealed it had identified several errors in its recent financial statements. As a result, Symbotic also lowered its sales guidance for the current fiscal quarter.
The sharp drop in Symbotic’s stock price—closing at $24, a 36% decrease—came after the company disclosed that it had misreported revenue recognition in its previous financial reports.
The news follows a series of restatements included in the company’s fiscal fourth-quarter earnings report, released on November 18, which highlighted earlier discrepancies.
Symbotic admits errors in financial reporting
In a detailed statement released Wednesday, Symbotic acknowledged that it had made mistakes in its revenue recognition for the past three quarters.
Specifically, the company disclosed that certain goods and services tied to milestones had been expensed before those milestones were achieved.
These errors resulted in overestimated revenues and profits in earlier reports, forcing Symbotic to revise its past financial statements.
The company further revealed that it had discovered additional cost overruns related to certain deployments, which would not be billable to clients.
As a result, the company’s previously recognized revenue will need to be reduced by between $30 million and $40 million for fiscal year 2024.
This adjustment will affect not only the company’s system revenue but also its gross profit, income before income taxes, and adjusted EBITDA.
Symbotic’s revised outlook has raised concerns among investors about the company’s internal controls and financial transparency.
The errors have led to a delay in filing the company’s 10-K report with the Securities and Exchange Commission (SEC), a critical document for investors seeking clarity on the company’s financial standing.
Lowered sales guidance for the current quarter
In addition to the financial restatements, Symbotic lowered its sales expectations for the first quarter of fiscal year 2024.
The company now anticipates quarterly sales in the range of $480 million to $500 million, a decrease from its previous forecast of $495 million to $515 million.
The revision in sales guidance marks a notable adjustment for the company, which had been projecting robust growth after a strong performance in 2023.
Despite the setback, Symbotic remains optimistic about its long-term prospects, particularly in the warehouse robotics and automation market.
The company’s platform, which is used by retail giants like Walmart, continues to be seen as an essential tool for modernizing supply chain operations.
However, the recent issues may raise concerns about the company’s ability to manage its finances and achieve sustained growth.
Symbotic struggles after a stellar 2023
Symbotic’s rollercoaster journey on the stock market has been marked by extreme volatility.
After its public debut in 2022, the company saw its stock soar by more than 300% in 2023, fueled by growing demand for automation in retail warehouses and the strategic backing of major investors like Walmart.
However, 2024 has proven to be a more challenging year.
The company’s stock is down over 50% year-to-date, reflecting investor concerns about its financial controls and recent missteps.
The company’s reliance on its relationships with major retail clients, particularly Walmart, has provided a strong foundation for its business.
However, the recent financial issues could affect investor confidence in Symbotic’s ability to maintain the rapid growth it saw in 2023.
Market reaction and future outlook
The steep decline in Symbotic’s stock price on Wednesday reflects investor anxiety over the company’s financial situation.
The company’s failure to meet its own financial targets, coupled with the need to restate its results, has raised doubts about its ability to recover in the short term.
As Symbotic works to correct its financial reporting errors and adjust its revenue forecast, it will need to demonstrate strong internal controls and transparent accounting practices to regain investor trust.
For now, investors will be closely monitoring Symbotic’s next steps, including the resubmission of its 10-K report and the company’s performance in the coming quarters.
With the company still heavily reliant on its relationships with major clients like Walmart, any further missteps could have a significant impact on its stock price and future prospects.
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