The Problem With Symbotic Stock $SYM

#Symbotic stock $SYM has been surging as investors salivate their growing relationship with #Walmart $WMT. While we’re very bullish on #WarehouseAutomation, that's precisely why we wouldn't buy Symbotic stock. Walmart and one other customer accounted for 95% of Symbotic's 2021 revenues with Walmart accounting for at least 77% of the backlog over the coming six years. The technology has been validated by America's largest private employer, and gross margins turned positive in 2021, but shares are very overvalued based on our simple valuation ratio. The Symbotic success story goes to show how #SupplyChainSolutions that help create efficiencies while reducing labor costs will be in strong demand for years to come. Walmart is one of the 30 dividend growth investing stocks we’re presently holding, so we couldn’t be happier to see a successful use of technology to reduce costs. That said, we’ve always avoided companies with high levels of customer revenue concentration, and Symbotic is no exception. Expect lots of volatility going forward as retail investors react to news both good and bad. Walmart’s commitment to Symbotic is a testament to the quality of their technology, but it’s also an indicator of how much low-hanging fruit there is in warehouse automation. There’s plenty of total addressable market to go around for everyone. We're avoiding SYM stock based on the findings discussed in this video.
RESEARCH PIECES USED IN THIS VIDEO:
1. Symbotic Stock: Sleeping With a Giant
www.nanalyze.com/2022/07/symb...
2. Symbotic Stock: A Pure Play on Warehouse Automation
www.nanalyze.com/2022/01/symb...
3. What’s the Best Robot Stock to Invest In?
www.nanalyze.com/2022/07/best...
CHAPTERS:
00:00 Intro
00:20 Symbotic's recent S-1 filing
01:17 Rick Cohen and C&S
02:52 Symbotic and Walmart
05:45 The Symbotic value proposition
08:11 Revenue concentration risk
10:18 Symbotic's profitability
11:56 Symbotic's high valuation
13:29 Conclusion
ABOUT US:
This video is brought to you by Nanalyze, a boutique media and research firm founded by finance professionals with decades of experience. We share insights about #DisruptiveTechnology #investments in a language that is future-proof and easy to understand.
Read all the Nanalyze Premium articles you'd like for free! Sign up for a 30-day trial of our monthly subscription with no strings attached: www.nanalyze.com/become-a-nan...
#SymboticStock #nanalyze

[@calebm.3085]

Interested to see what your take is now based on the recent developments with Greenbox, which definitely changes the trajectory of their future growth. Great analysis nonetheless!

[@Nanalyze]

We might revisit the stock once they start showing revenues are diversifying away from a single customer.

[@user-cf2px2ko8y]

@@Nanalyze 👎

[@Nanalyze]

@@user-cf2px2ko8y You'll need to articulate your thoughts a bit better there sir. We don't speak emoticon around here ;)

[@flash521]

Year later. Thank you for your informative post and comments. SYM is a serious long term investment as opposed to a trade. Now, they have commitments for work that go on for the next few years or more years making the stock low impacted by a slow economy. They are shortening the time to build and make operational distribution centers and smart enough to pursue more growth by outsourcing. Stock is down now, still volatile, however the upside will be secured as they go into profit by 2025. Demand will only increase because this AI and robotics is what business desires, efficiency and competitive edge.

[@Nanalyze]

You're most welcome! Any stock we purchase is always a serious long term investment. Trading is a myth that many fall for and end up losing money and time. We would like the company a whole lot more if they can just diversify away from Walmart.

[@derrickkwilliams]

My take away, I could just buy $WMT and get the exposure that way. Maybe this is a classic case of good story, good tech, but flawed business model. The relationship with Walmart is concerning and they don’t have a lot of customers. So the question is, is this company really created to service a few pre-picked companies? Like a consortium? IDK. I’m not a business person. If this is true and this company never really expands (don’t know for sure, only time will tell) then why go public? You gave me what I needed here. I kinda had the same view as you but I didn’t know how to articulate or process it they way you did, so I’m grateful you spent time to do that. I already cut my position when the stock went to $19. Normally when stocks make these kinda moves its not based on reality. Still holding 10% of my position. So we will see how it all plays out. Thanks again as always.

[@Nanalyze]

You are quite welcome. We had some of the same questions you have. For a company to go all in with two customers isn't a normal business model. They went public to raise capital to grow faster, and perhaps they didn't choose to only focus on two customers but that's how the business has evolved. Taking some money off the table when stocks are clearly subjected to hype makes sense.

[@2beJT]

Perhaps they are just taking money from the investors to expand into Walmart?

[@Nanalyze]

@J T Probably a pretty accurate assessment of the situation - and "customer number two."

[@dvdmex1978]

Customers that symbotic has system built systems for, Sysco, C&S, Target, Coca Cola, Giant tiger, Albertsons, Jewel-Osco, Walmart

[@software-sage]

I’m bullish on this stock. In the past 3 months they’re up 100% we’ll outperforming the indexes. This is one of the only stocks in my portfolio that’s is up 3-5% on any given day when the market is all red. Wait until Wall Street picks up on this in the future.

[@joepiv]

We don't invest with 3 month time horizons. Have you seen how much "AI stocks" have been up in the last three months? Did intrinsic value really change that much? We also don't look to see what tickers are "green" when the market is red. That's noise. If you believe in this company with a long-term conviction, great. Wall Street is aware of what's out there, don't worry.

[@JF44501]

I might be misunderstanding something, but how exactly do the V-1 and V-3 common stock work? Does this company actually have about 580 million + shares fully diluted?!

[@Nanalyze]

Great question to raise on our Discord server ;) We'd have to research that to provide an answer.

[@JF44501]

@@Nanalyze Fair answer

[@terryklender4209]

Could you do a video on ASPN?

[@Nanalyze]

That's a name we haven't heard in a while. We'll take a look and see if it merits an article, then a video would follow. Thank you for the suggestion!

[@tott1881]

I was in one of the first two Walmart DCs when symbiotic was being piloted to the company.

[@Nanalyze]

Interesting! Hopefully they're expanding outside of just Walmart now. We'll have to revisit the stock at some point.

[@dvdmex1978]

Not only walmart, we've done C&S, Sysco, Target, Coca Cola, Giant Tiger, Albertsons, Jewel osco

[@Nanalyze]

@@dvdmex1978 We look at percentage of total revenues. Still around 85% Walmart is it?

[@geofromnj7377]

What the heck is a DC?

[@tott1881]

Distribution center

[@jajaja8]

NOV 2023, SYM at $51 .... how right or wrong was this video and comments? May be time to do a re-assessment?

[@Nanalyze]

Paying subscribers have raised the need for an update here. Note that we invest in companies, not stocks. We put these videos together using a fact-based approach and consistent methodology that evolves over time, and that we've been refining for over a decade. If the facts have changed (the risks have been reduced), then perhaps we might reach a different conclusion. Stay tuned!

[@victoriabennett7823]

Could customer B be e commerce consumers ?

[@joepiv]

We're not sure about that but their valuation has dropped dramatically since this video - which is a good thing!