Sonos was a victim of inflation, semiconductor shortages, and a high valuation.
Key Points
- Sonos is dealing with inflation, supply chain issues, and the global chip shortage.
- The home audio leader announced price increases to offset its higher costs.
- The stock dropped 18.5% without any bad news coming out, making an attractrive entry point for value investors.
Sonos (NASDAQ:SONO) shares lost 18.5% in September, according to data provided by S&P Global Market Intelligence, as investors reacted to the company’s supply chain challenges and relatively high valuation. This is yet another instance of inflation driving up production costs, and it’s unclear how much of that can be passed along to consumers. Sonos acknowledged these challenges in its August earnings call, making it vulnerable to investor concerns about inflation.
So what
Sonos recently announced new products, new programming on Sonos Radio, and price increases to existing products. The management team has made it no secret that the consumer audio company is impacted by supply chain disruptions, and the global semiconductor shortage is like playing a role here as well. There’s no exact blueprint for navigating these challenges, so the extent of damage is anyone’s guess. There’s also no indication that global supply chains or chip shortages will be sorted out anytime soon. It’s no surprise that investors are getting antsy.
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