Which Robotics Stocks to Sell Before They Fail
Labor shortages are pushing companies to take unprecedented steps such as offering non-market wages and better working conditions. As a result, countries are opening their doors more widely to talent from abroad. The retirement age is also rising, as the available labor force is not enough to meet the needs of the economies. According to analysts, the worldwide shortage of 85 million workers will be expected by 2030. This can be equated to $8.5 trillion in losses due to staff shortages. Therefore, automation companies and robotics suppliers are highly valued. Thus, the advice to sell robotics stocks sounds strange in the context of the overall boom in this area.
Technology businesses are grabbing opportunities and offering employers an alternative. Robots can largely cover the gap in labor force, as they can take on dangerous and physically demanding tasks. Maintenance of military aircraft, driving, warehousing and construction are all areas that could benefit from using robotics.
In the wake of the hype, companies are raising millions of investor dollars and promising mountains of gold. But before the peak of AI’s popularity, the market had already faced a series of robotics company closures. If we put aside the narratives about the win-win nature of such investments in the future, many companies may fail to meet the expectations placed on them.
iRobot (IRBT)
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Robotic vacuum cleaners are in many modern homes and people accept them as the norm. But in 2002, it was a breakthrough that put iRobot (NASDAQ:IRBT) on the list of high-tech companies.
The Roomba robot vacuum cleaner revolutionized home innovation and changed how people clean their floors. The company had existed for 12 years at the time and did not limit its production to cleaning devices. It expanded its product line to include educational coding robots and air purifying robots.
A bright history does not guarantee eternal prosperity. iRobot confirms this by being included in the list of robotics stocks to sell. For two fiscal years in a row (2022 and 2023), they saw a drop in revenues of more than 24% compared to the previous year. Annual revenues fell below $1 billion for the first time since 2017, resulting from declining consumer confidence. Also, the high cost of creating new products and the long period of the Covid-19 pandemic played a role. The slowdown in sales eventually led the company to announce a restructuring plan in early 2024.
The plan included reducing the company’s operational inefficiencies and changing the management team. The restructuring led to a reduction in the workforce and included cost-cutting. The change of the Chief Executive Officer (CEO), who had been at the helm of iRobot for 33 years, was also important for the company. However, even this could not turn the situation around and revenue continued to decline (6% compared to the same period last year). Finally, $40 million of operating loss puts pressure on profits and does not speak in favor of IRBT’s investment attractiveness.
Symbotic Inc (SYM)
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Since 2006, Symbotic (NASDAQ:SYM) has been automating processes for supply chains, improving the handling of pallets and cases in distribution centers. The Massachusetts-based company is increasing its revenue but remains unprofitable.
The speed of the SYM platform implementation is another reason for investors’ concern. This company from the list of robotics stocks to sell takes about 24 months from the facility’s start to the full implementation of AI robots. Such a long period makes Symbotic less competitive, as even the recent acceleration to 20 months does not put it on par with market leaders.
The recent insider trading incidents have increased doubts about the company’s prospects. Management and major shareholders have been selling millions of dollars worth of stock. Major shareholder David A. Ladenson sold 50,000 shares, and Vice President Michael David Dunn sold 2,000 shares. Together with other sales, securities worth more than $2 million were sold quickly. The desire for diversification or liquidity may explain such actions, but coincidences alert the market and put pressure on SYM.
Hesai Group (HSAI)
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The Q2 of 2024 started without a standing ovation from investors, as the results of the Q1 made them think about further cooperation with Hesai Group (NASDAQ:HSAI). The company’s shares fell by 12% immediately after the release of data for the first 3 months.
This happened even despite exceeding analysts’ expectations by 6.5%. Revenue of 359 million yuan may seem like a green light to buy. But the market has analyzed the earnings report more deeply and is not ready to take risks. The previous forecast for 2024 was 2.95 billion yuan of profit. Now this figure has fallen to 2.73 billion yuan. On the other hand, losses per share are expected to increase to 2.27 yuan.
To stay afloat, Hesai Group is forced to constantly increase its investment in research, which is draining its finances. If the company stops for even a quarter, competitors will leave it out of the game. In the field of autonomous vehicles, patents are the engine that drives companies to the top. Velodyne Lidar (NASDAQ:VLDR) and Luminar Technologies (NASDAQ:LAZR) don’t give time for a break, as they continue to register more innovative technologies.
Disruptions in the semiconductor supply chain lead to volatility in the company’s operations, which puts it among the top robotics stocks to sell. The entire process of lidar production is tied to this limited resource and cannot be changed overnight. Analysts predict the semiconductor crisis will intensify. So, HSAI will increasingly face delayed shipments and a corresponding reduction in margins.
On the date of publication, Julia Magas did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
