Roomba Maker iRobot Struggles with Potential EU Rejection of Amazon Acquisition and Falling Sales, Analyst Says
Portfolio Pulse from Anusuya Lahiri
iRobot Corp (IRBT) shares hit 52-week lows amid reports that the EU may reject its acquisition by Amazon (AMZN) due to competition concerns. iRobot's sales fell 29% to $583 million in the first nine months of 2023, with an adjusted operating loss of $153 million. Needham analyst James Ricchuiti maintains a Hold rating on IRBT, citing the company's deteriorating business, increased competition, and supply chain issues. If the deal fails, iRobot may receive a $94 million termination fee, but the company still faces challenges in achieving profitability without further cost reductions and demand improvements.
January 22, 2024 | 5:04 pm
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iRobot faces potential EU rejection of its acquisition by Amazon, alongside a significant drop in sales and a substantial operating loss. The company's future profitability is in question without further cost cuts and demand increases.
The potential EU rejection of the acquisition by Amazon and the reported decline in sales and operating loss are likely to negatively impact investor sentiment and the stock price of iRobot in the short term.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Amazon's planned acquisition of iRobot may be rejected by the EU, which could affect Amazon's expansion plans in the robotic vacuum cleaner market.
While the rejection of the iRobot acquisition could be a setback for Amazon's market expansion strategy, the overall impact on Amazon's diversified business is likely to be limited in the short term.
CONFIDENCE 75
IMPORTANCE 40
RELEVANCE 50