Investors navigating the ever-evolving landscape of the robotics sector are at a crucial juncture. Despite robotics redefining technological boundaries, like any other emerging technology, it is imperative to think cautiously about robotics stocks to sell. Companies that are being labeled as overvalued or inherently risky within the robotics domain deserve a second look.
The industry’s pace isn’t slowing down despite the uncertainty shrouding these stocks. Projections hint at market revenues soaring to an eye-watering $34.94 billion by 2023 and climbing to a whopping $43.32 billion by 2027. However, not every player in this burgeoning sector will share the limelight of success. Amidst the industry’s promising horizons, several robotics firms are unattractive bets at this point, so it is imperative to stay vigilant, analyze financial metrics and understand market dynamics crucial for navigating this diverse industry.
Ambarella, Inc. (AMBA)
Ambarella, Inc. (NASDAQ:AMBA), once a stalwart in the semiconductor realm, is having it rough at this time. The firm is acclaimed for its advanced image processing chips vital in autonomous driving systems and industrial robotics. However, it now faces stiff headwinds of competition, escalating costs and nagging inventory woes in the saturated system-on-chip market.
Moreover, the initial upsurge from favorable market conditions seems to wane as the unpredictable Chinese market and challenges from key clients mount. Ambarella’s position feels increasingly tenuous with the firm’s heavy dependence on a select few customers and the automotive sector’s volatility. Consequently, the company’s stock performance reflects these concerns, dropping by 29% this year. In contrast, the Standards and Practices (S&P) 500 has enjoyed a healthy 16% increase.
Furthermore, Ambarella’s future looks rather gloomy. With its second-quarter revenues for fiscal 2024 plummeting by 23% to $62.1 million and the stock trading at an astounding 10.3 times forward sales estimates, a striking 293% above the sector’s median, savvy investors should proceed cautiously.
Symbotic (NASDAQ: SYM), a frontrunner in end-to-end robotic automation solutions for supply chains, has been taking the market by storm. Through the prowess of its AI-driven robots, SYM stock skyrocketed more than 160% year-to-date, with a notable 91% bump in just the past six months. After its public debut in 2022 via a shell company, the firm followed up with a stellar $311.8 million in sales, a whopping 77.6% increase year-over-year.
However, beneath this gleaming facade, discerning investors are spotting potential hazards. Despite its meteoric rise and impressive sales, Symbotic’s valuation raises eyebrows. The stock hovers at a lofty 32 times its trailing twelve-month cash flows, coupled with a worrisome net loss of $39 million last quarter.
Analysts are starting to chime in with their reservations. Specifically, William Blair’s Ross Sparenblek recently highlighted concerns after Symbotic’s earnings reveal, suggesting the valuation feels “stretched” and its strong outlook might already be factored into its price. Moreover, SYM stock has been pulling back over the past couple of months, having 13% of its value last month.
HP (NYSE: HPQ) appears to be sinking as it grapples with its disheartening third-quarter fiscal 2023 report. Revenues nosedived a staggering 10% year-over-year to a dismal $13.2 billion, missing the mark by an astounding $207 million. While the adjusted earnings per share limped in at 86 cents, it barely touched projections. This once-thriving titan, buoyed by pandemic-induced PC sales, is witnessing a robust momentum crumble.
HP revealed its SitePrint robotic solution last year, a trailblazing autonomous entity adept at streamlining construction layouts. Yet, for all its novelty, the market is skeptical. Far from stirring excitement, this robotic leap only highlights the company’s frantic bid to innovate amidst decline.
Furthermore, HP’s stock plummeted 13.5% in the past three months, with a forward price-to-earnings ratio of nine times, indicative of a value trap. While some might look at HP as a potential haven in the tumultuous bear market, the broader sentiment veers toward caution. Do the smart thing and note all of these robotics stocks to sell.
On the date of publication, Muslim Farooque did not have (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