Sonos shares crash as forecast fails to strike a chord
Reuters
Published May 11, 2023 09:16AM ET
(Reuters) - Sonos (NASDAQ:SONO) Inc was set to shed more than a fifth of its market valuation on Thursday after a revenue forecast cut fueled worries that consumers were dialing down purchases of its premium speakers in a turbulent economy.
The stock was down 21% in premarket trading, on course to erase nearly all of the year-to-date gains. At least three of the seven analysts covering Sonos cut their price targets.
"While the revised guidance takes numbers lower, we have no reason to 'call the bottom' at this point," said Raymond James analyst Adam Tindle.
Consumer electronics makers have taken a beating this year as people prioritize essentials over products such as laptops, speakers and smartphones in the face of rising borrowing rates and sticky inflation.
A shift to services spending from goods has also hurt the consumer hardware businesses following a pandemic boom, analysts noted.
Sonos said it now expects annual revenue of between $1.63 billion and $1.68 billion, compared with its prior range of $1.7 billion to $1.8 billion. Analysts were expecting annual revenue of $1.69 billion.
"We are reducing our expectations for the second half of fiscal 2023 due to softening consumer demand and channel partner inventory tightening", said Sonos CEO Patrick Spence.
The company also lowered its annual gross margin forecast to between 44.3% and 44.8%, compared with 45% to 46% previously.
In the second quarter, sales at its mainstay speaker business fell about 24% to $241.2 million from a year earlier.
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Written By: Reuters
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