Symbotic Tanks Despite Strong Earnings—Here’s Why the Market Panicked

Symbotic's stock just got crushed—even after smashing expectations. What gives?

Wall Street's knee-jerk reaction exposes its fickle nature. The automation darling posted solid numbers, but traders dumped shares like hot potatoes. Classic 'buy the rumor, sell the news' behavior.

Key factors behind the sell-off:

- Profit-taking after recent gains

- Overblown expectations despite solid execution

- Sector-wide rotation out of tech

Bottom line: Markets reward growth until they don't. Another reminder that fundamentals often play second fiddle to market psychology—especially when algos control 80% of trading volume.

Symbotic sees profit-taking after a big run

It should be noted that Symbotic's stock had an incredible run heading into earnings, with the stock up 124% on the year. So, one might understandably chalk today's action up to profit-taking on a less-than-perfect quarter.

Revenue came in stronger than expectations at $592.2 million, up 25.9% on the year, while net loss per share of $0.05 missed expectations by $0.04. Still, as a growth company, investors are likely more focused on the top-line trajectory than bottom-line profits at this point.

And here is where the problem may lie, if one can call it that. For the upcoming fiscal fourth quarter, Symbotic only guided for between $590 million and $610 million in revenue -- basically very little sequential growth, if any at all.

But management gave a "good" reason for the revenue hiccup. In conjunction with earnings, the company unveiled its next-generation storage technology system, which offers increased storage capacity, faster case handling, and better fire suppression. With the new system just now commercially available, management noted: "With the launch of a proprietary new storage structure, we expect a temporary short-term impact on revenue based on schedules shifting to accommodate. Importantly, the new structure does not affect our backlog and supports our long-term value creation."

Image source: Getty Images.

Symbotic is an interesting physical AI play, but expensive

Symbotic is a leader in next-generation warehouse automation, and the company is clearly executing well. A near-term slowdown due to supply constraints of its next-generation product isn't a big deal.

However, valuation may be an issue after this year's huge run. Shares trade at over 14 times this year's revenue estimate and over 223 times this year's adjusted earnings estimates. So today, Symbotic is an interesting stock to watch, but too expensive for this investor's liking.