Sonos Shares Surge On Headphone Hint
Sonos shares rallied the most in nine months simply because of the Companies hints that they are entering the headphone market.
Overnight Sonos share jumped 17% despite falling sales and profits.
The surge came after management claimed that they are set to deliver a “major” new product category, for the business, in the form of headphones which are seen as a logical extension of their struggling speaker market.
According to insiders the business has been working on a headphone project for nearly four years.
Chief Executive Officer Patrick Spence said the company will be rolling out a lucrative new product in the coming months — without saying what it is.
At the same time Sonos has moved to slash their headcount in their product development teams as part of a strategy shift to cut losses.
While Sonos’ fiscal fourth-quarter results beat analysts’ estimates, the revenue forecast for fiscal year 2024 came in light.
The company predicted sales of $1.6 billion to $1.7 billion — the midpoint of which fell below Wall Street projections.
Local Asia Pacific sales fell 32%.
Still, headphones could be a promising opportunity, said Jefferies analyst Brent Thill. He sees the launch of such a product as a “no-brainer.”
It “creates the potential to sell multiple headphone products into the same household,” Thill said in a note to investors. Headphones also are upgraded more frequently than Sonos’ other products, he said.
Sonos has been contending with lacklustre speaker and device sales. Revenue fell 6% in the fiscal year that just ended, dragged down by a broader slowdown in consumer tech spending. Smart speakers and other home devices have been a particularly difficult market, with many consumers holding off on upgrades.