When Amazon‘s deal to acquire iRobot (NASDAQ: IRBT) fell through earlier this year, it was as if the air was let out of the robot vacuum maker’s stock. Almost in an instant, shares went over a cliff. The company has been struggling to gain traction ever since. Its sales have been declining, the business is struggling to stay out of the red, and cash burn is also a concern.
After all of this, iRobot’s stock is down 72% year to date. However, the company recently brought on a new CEO with experience in leading turnarounds. And at a fairly sizable discount, the stock may appear to be a cheap buy for contrarian investors. Can the stock bounce back this year, and could now be a good time to buy shares of iRobot?
iRobot gets a new CEO with “turnaround experience”
On May 7, iRobot announced that Gary Cohen would be coming on as the company’s new chief executive officer, effective immediately, to help steer its turnaround. With 25 years of experience, including dealing with turnarounds, Cohen has experience helping multiple businesses improve their sales and profits through cost-cutting initiatives, corporate restructuring, and product innovations.
For iRobot, it’s the type of leadership that could help put the company on a much more positive trajectory, as its financial performance has been abysmal in recent years. Sales of $891 million in 2023 have fallen by 38% from 2020, when they topped $1.4 billion. During that time, the company’s bottom line has flipped from a profit of $147 million into a loss of nearly $305 million this past year.
The company faces a tough road ahead
At a time when consumers are facing higher inflation and there’s potentially a recession on the horizon, it won’t be easy for iRobot to get on the right track. Its high-priced robots may find it hard to do well with more competition in the market, and people may be less likely to spend as much as they have in the past.
In iRobot’s most recent quarter, which ended on March 30, its average gross selling price per robot unit was $346 — down from $402 in the same period last year. Even with a lower…
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