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.
