Key Stats for Symbotic Stock
- Price Change for Symbotic stock: -21.5%
- $SYM Share Price as of Dec. 2: $67
- 52-Week High: $88
- $SYM Stock Price Target: $60
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What Happened?
Symbotic (SYM) stock plummeted over 21% on Tuesday after Goldman Sachs downgraded the warehouse automation company to sell with a $47 price target.
The downgrade represents a sharp reversal for a stock that had tripled year-to-date before the analyst’s call.
Goldman Sachs analyst Mark Delaney cited several concerns in his bearish note. Chief among them is Symbotic’s heavy dependence on a limited customer base and uncertainty around future cash generation.
While Walmart remains a satisfied customer and has ordered systems for all 42 of its U.S. regional distribution centers, Delaney warned that the company has struggled to attract new independent customers over the past few years.
The analyst also highlighted concerns about Symbotic’s $22.5 billion backlog, roughly half of which ($11.6 billion) comes from GreenBox, a joint venture with SoftBank where Symbotic owns 35% and SoftBank owns 65%.
Delaney noted that GreenBox has not signed any third-party customers more than two years after its launch, calling it “the type of circular transaction that investors are increasingly scrutinizing.”
According to Goldman, shipments to GreenBox may generate only modest upfront cash flow since Symbotic can satisfy its 35% funding obligation either with cash or by forfeiting margin on system deliveries.
This could cause cash flow growth to lag behind gains in adjusted EBITDA.
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What the Market Is Telling Us About Symbotic Stock
The brutal reaction to Symbotic stock suggests investors are taking Goldman’s warnings seriously, particularly around valuation.
During the company’s recent earnings call, management highlighted several positive developments. CEO Rick Cohen discussed signing Medline as the first customer in the healthcare vertical, which represents over 500 distribution centers with 76 million square feet of warehouse space in the U.S. alone.
The company also rolled out next-generation storage technology that offers higher density and faster installation times.
CFO Izzy Martins emphasized strong systems gross margin improvement, reaching nearly 22% in the fourth quarter. She expressed confidence that margins would continue expanding as the company deploys more next-generation systems over the coming quarters.
However, Goldman’s concerns about customer concentration appear valid. When asked about GreenBox’s progress, Cohen acknowledged Atlanta would be the first site to come online but had no customers to announce yet. He said he hopes to have announcements in the next 90 to 180 days, but couldn’t provide specifics.
While Symbotic stock had been riding high on enthusiasm for automation and robotics, Goldman’s downgrade has forced investors to confront the risks in the business model.
The company’s ability to prove it can win customers beyond Walmart and generate real cash flow from GreenBox will be critical to restoring confidence and justifying the premium valuation.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
