Sonos Shares Tumble 42% As Consumers Stop Buying Their Aging Sound System
Shares of Sonos have tumbled, dropping 42% during the past three months with the Company struggling to find buyers for their sound systems after the Company tried to nobble loyal customers earlier this year in an effort to generate sales on their own web site Vs retail partners.
Goldman Sachs analyst Rod Hall cut his rating on the stock to sell from buy while lowering his target price to $7.50 from $20.
The shares are currently trading at US$8.51 falling 8% over the weekend alone.
Desperate for sales of their aging sound system Sonos has now trying to jack up online sales at the expense of retailers.
Recently the Australian subsidiary was exposed by ChannelNews trying to stop specialist sound dealer Klapp from discounting Sonos product because it affected the premium price the Company wanted to charge online.
Klapp no longer sells Sonos network sound systems instead the retailer like several other Sonos dealers is recommending Devialet & Bowers & Wilkins speakers because they are able to deliver 24bit audio Vs only 16bit delivered by Sonos speakers.
Hall said, “We now expect a severe reduction in smart speaker demand with Sonos products generally at the top end of the pricing spectrum,” Hall wrote.
He added “We are concerned that near-term demand impact will be more material than current consensus expectations and that recovery will be slower in 2021.” Sonos shares have lost 42% over the past three months as the S&P 500 SPX has dropped 15%.