Why Symbotic Stock Crashed Today
Key Points
Goldman Sachs just downgraded Symbotic on valuation concerns.
The banker also warns Symbotic has struggled to land clients beyond Walmart.
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Robotics stock Symbotic (NASDAQ: SYM) is on the fritz today, falling 21% through 1:40 p.m. ET, and you can blame Goldman Sachs for that.
Because Goldman just downgraded Symbotic.
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Goldman downgrades Symbotic
In a note out late last night, Goldman Sachs analyst Mark Delaney downgraded Symbotic stock to sell with a $47 price target.
"Market interest in automation and robotics related assets in general" has made Symbotic stock a three-bagger since the start of this year, as TheFly.com points out in a report on Goldman's note today -- and not without reason. Walmart (NYSE: WMT) is reportedly pleased with the performance of Symbotic's warehouse automation technology, and Symbotic's sales have more than tripled over the past three years.
However, while Walmart is undoubtedly a big win, Goldman warns that Symbotic has struggled to attract other customers in recent years, and "the valuation on Symbotic is stretched, with the stock now trading at a 185-times enterprise value to expected forward adjusted EBITDA multiple."
Is Symbotic stock a sell?
Mind you, I don't place much faith in multiples like "forward" (i.e., hasn't happened yet), "adjusted" (i.e., not generally accepted), or "EBTIDA" -- commonly derided as "earnings before costs." But other multiples for gauging Symbotic's valuation don't look much better.
Valued at an implied market capitalization of more than $50 billion, according to data from S&P Global Market Intelligence, Symbotic stock sells for more than 22 times trailing sales, 50 times free cash flow, and infinity times GAAP earnings... because Symbotic doesn't have any GAAP earnings.
Granted, if Symbotic can achieve the 30% long-term earnings growth other analysts forecast for it, Symbotic might be worth every penny of its cost. Goldman seems to be warning it won't grow that fast, however.
And that's why investors are selling Symbotic stock.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Symbotic and Walmart. The Motley Fool has a disclosure policy.
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