- Revenue is up 20x in 2 years as Symbiotic hits critical scale.
- Shares are printing fresh all-time highs, with strong momentum behind them.
- Some profit-taking is imminent, which will open up buying opportunities.
Despite being a $30 billion company, Symbotic Inc (NASDAQ:SYM) isn’t one of the more well-known stocks out there. That’s been changing, though, helped by the fact that in recent weeks they’ve consistently been among the best-performing equities. Shares of the AI robotics company have been on an absolute tear since last November, taking on more than 600%. If that kind of return isn’t enough to guarantee them a spot on your August watchlist, here are three more reasons.
Earnings
First things first, their earnings are red hot and have never been better. They’ve grown revenue 20x in the past two years as their sales have hit a critical scale. This week’s Q3 topline revenue number was up a full 77% year on year and well ahead of what analysts had been expecting. They’re not profitable yet, but with EPS at -$0.07, they’re also not a million miles away.
For their revenue to be hitting the stratosphere like this is almost perfect timing, as AI has never been hotter and never been a bigger part of our reality. There are plenty of AI-related stocks out there riding on the coattails of NVIDIA Corp (NASDAQ:NVDA) but with little revenue to show for it. Symbotic, on the other hand, is already up and running with the best of them, its record operating margin for the last quarter being a testament to this.
All-Time Highs
It follows that a company whose revenue is taking off, like Symbiotic, should also have a strong share price, and there’s no question of that. What’s interesting though is that few saw this happening this time last year when shares were approaching an all-time low. Since the end of last year, though, they’ve only gone up, with fresh all-time highs being regularly printed since April.
Many funds and investors place great significance on a stock being at all-time highs, as it’s one of the clearest indicators of bullish buying momentum. When there’s a seismic shift underway in a company’s fundamentals, like with Symbiotic and its revenue, the share price is often left behind and forced to play catch-up.
At a time when all the major indices are still trying to reclaim their all-time highs, finding companies who are currently printing fresh ones is a rare sight. Symbotic’s shares had been taking a bit of a breather last month after June’s peak, but Monday’s report sent them soaring above this.
Entry Opportunity Opening
This brings us to our final point. It can be uncomfortable, if not outright scary, buying into a stock that’s already rallied more than 600% in less than a year, notwithstanding the fact it might have strong earnings and technical support. Readers who are sceptical about the stock’s ability to maintain this kind of pace will be interested to note that William Blair downgraded Symbotic stock on Tuesday.
The downgrade from Outperform to Market Perform came on the back of Symbotic’s Q3 results, which analyst Ross Sparenblek admitted was “well above expectations” but gave fresh fuel to valuation concerns. With shares trading at roughly 80 times fiscal 2025 EBITDA estimates, he feels things are getting frothy, and some profit-taking might be imminent.
However, any dip from here can only be good news for investors who are impressed with Symbotic’s growth rate but who also want to feel they’re getting in at a reasonable price. Let’s see if their shares can consolidate in the mid-low $50s over the coming weeks, with any move back into the $40s likely to be short-lived.