Symbotic is a robotics company that could be poised to benefit from massive growth in the supply chain industry over the coming months. This company builds and installs gigantic automated robots that lift, push, and slide packages from Point A to Point B – helping other companies automate their supply chains. SYM stock is currently down nearly 30% YTD. But, with the supply chain industry likely to boom over the coming years, is this the perfect time to buy a great company at a good price? Let’s take a look.
SYM’s Most Recent Quarter
Symbotic produces robotic arms and robots that can be programmed to fit specific needs, mainly in warehouses. By offering end-to-end systems, Symbotic helps other companies automate their supply chains for improved efficiency, speed and flexibility. To get an idea of whether or not to buy SYM stock, I dug into the company’s most recent earnings report (May 6th). Here’s what I learned:
- Q2 FY2024 Income: Symbotic posted revenue of $424 million (+59% annually) and a net loss of $41 million.
- Annual Revenue Growth: Symbotic’s revenue is expanding quickly, growing at nearly 100+% annually over each of the past three years. Symbotic reported $252 million in revenue in 2021, $500 million in 2022, and $1.2 billion in 2023.
- Guidance: Symbotic expects revenue of $450 million to $470 million next quarter.
- Product Progress: In Q2, Symbotic deployed three new systems and completed three systems, bringing the company to 18 fully operational systems
- Backlog: Symbotic has an incredible backlog of committed contracted orders worth $22.8 billion.
There’s little doubt that Symbotic is already growing quickly. But, I’m mainly excited about SYM stock due to its industry: supply chain management and automation.
Opportunity in the Supply Chain Sector
Symbotic is a company that’s likely in the right place at the right time for expansive growth. This is because many companies are prioritizing their supply chains in the wake of the Covid-19 pandemic. The pandemic uncovered the risks of having a non-optimized supply chain and many companies are investing heavily to ensure this does not happen again. According to a study by Project 44, executives are planning to prioritize supply chains in 2024 onward.
- 89% of executives see supply chain disruption as the biggest short-term risk for their organization.
- 43% of executives say supply chain investment will increase in the next 12-18 months.
- 72% of executives say they’re looking to make significant technology investments to reduce long-term costs.
In other words, the sales team at Symbotic will likely see hefty commission checks over the coming months. At the same time, innovation in supply chain technology is rapidly advancing thanks to artificial intelligence.
Symbotic’s Recent Innovations
In recent months, Symbotic has made significant advancements to its products such as allowing its robots to see and interpret live images. Their autonomous bots can “view” a box in front of them and make determinations on what to do with it. If the box is labeled correctly then the robot will move it to the next location. But, if the box is damaged then the robot will set it aside. You can watch Symbotic’s marketing video and see its bots in action for yourself.
In Symbotic’s own words, its robots are “equipped with advanced sensors and AI-driven software, that allow them to navigate complex warehouse spaces, pick and place items and manage inventory with remarkable precision”
Symbotic has also been incorporating Nvidia’s (Nasdaq: NVDA) chips into its robots. These chips allow the robot to “think” more strategically when compared to older models. For example, the bots can view irregularly shaped boxes and still identify them correctly so that production doesn’t shut down if a box gets a little bit crushed. Think of this like Google’s (Nasdaq: GOOG) algorithm still recognizing that you meant “stocks to buy” even if you typed “Stkcs to buy”
As of Q2 2024, Symbotic owns 401 patents with 203 pending. So, the company seems to be investing heavily in improving its product – which is almost always a good sign for the company.
Should You Buy SYM Stock?
SYM stock seems poised for growth, due to the industry that it operates in and the quality products. Symbotic’s massive $22 billion backlog of orders is a testament that the company has way more demand than it can handle – a good sign.
As I write this, Symbotic is currently worth $21 billion. With 2023 annual sales of just over $1 billion, the company trades at 21X sales – fairly cheap considering how quickly the industry and company could grow in the coming years.
However, while I like SYM stock’s prospects over the long term, I’d be careful buying too much at once in the short term. Since going public in 2022 (via SPAC), SYM stock has had a history of intense volatility, especially during earnings events. A good earnings report can send the stock shooting up 20%. But, a bad report (or poor guidance) can cause the stock to sink 20%. With this in mind, consider using Dollar Cost Averaging to avoid getting caught on the wrong side of a price swing.
I hope that you’ve found this article valuable when it comes to discovering whether or not to buy SYM stock. If you’re interested in learning more then please subscribe below to get alerted of new articles.
Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor. Ted also did not own shares of SYM stock at the time of writing.
