COMMENT: Concerns Over Sonos Beam & One Speaker
Shares of Sonos have tanked as early investors in the US Company bale out on a Company who arrogantly thought they could get away with taking investor money while delivering no profits for years, this was despite the Company having a global networked audio market to themselves for close to a decade.
Now brands such as Apple, the Samsung owned Harman Kardon, Bose, Google and Amazon are set to teach this Company a lesson in networked audio marketing with both their new Sonos Beam and Sonos One speaker set to come under attack from competitors.
There is nothing in a Sonos sound system that is unique other than a proprietary network system that is unable to deliver 24bit audio that is now found in several other networked speakers such as the new Bose and the Harman Kardon Citation range of speakers that will be on sale shortly in Australia.
Today’s shocking result has seen their largest single-day percentage drop in history after Sonos delivered a woeful first earnings report as a public company.
Sonos shares have tumbled 22.03% in trading here in the USA, after the stock gained 13% earlier in the week.
Some analysts claim that the problem for Sonos is that they are now entering the most important quarters of the year with a product range that has to perform up against some impressive new offerings from competitors.
Many are claiming that the stock could go the same way of GoPro or Fitbit and both these two brands are struggling.
Seeking Alpha said, “Niche consumer hardware stocks have been undergoing tremendous pain in the markets over the past two years, with both Fitbit and GoPro suffering from both severe saturation and intense competition, critical causes behind steep revenue declines”.
Market Watch claims that the company’s December-quarter outlook, and results, “will be a more significant catalyst for Sonos shares, as it will give investors a better read on market acceptance of new products.
Jefferies analyst Brent Thill is somewhat concerned about the performance of Sonos’ new Beam product.
“We would like to see a big product launch such as the Beam performing above expectations,” wrote Thill.
Morgan Stanley’s Katy Huberty was also disappointed on the Beam front, writing that the latest results “lacked transparency into Beam sales which is key to stock performance.”
New products tend to represent 23% to 25% of Sonos revenue, and she’d like to see more visibility into the Beam’s traction before turning more constructive on the stock. She maintained her equal-weight rating and $20 target price.