Symbotic (NASDAQ: SYM), a promising warehouse automation startup, saw its stock price surge 40% to new highs after posting impressive Q4 earnings. Revenue grew 60% amid strong demand, margins expanded significantly, and the company achieved a key profitability milestone ahead of schedule.
With Symbotic now up over 400% in the past year, is it too late for investors to buy this high-flying stock? Or does this warehouse automation pure-play still have ample room to run? Let’s analyze the latest results and valuations to find out.
Blockbuster Quarter Drives Price Surge
On November 21st, Symbotic revealed fourth quarter financials that swept past expectations and sent the stock rocketing higher. Revenue hit $391.9 million, crushing estimates by $85.1 million and representing 60% year-over-year growth. Higher-than-expected volume from key customers like Walmart drove the big beat.
Importantly, Symbotic posted positive adjusted EBITDA of $13.3 million – its first ever quarter of profitability by this key metric. Just a year ago adjusted EBITDA stood at negative $20.5 million. So profitability arrived earlier than the market anticipated.
For full-year fiscal 2023, top line results were just as impressive. Revenue doubled to $1.18 billion, while the adjusted EBITDA loss narrowed drastically from $89.8 million to just $17.6 million.
“Doubling Down” on Growth
On the earnings call, Symbotic CEO Rick Cohen described fiscal 2023 as a “year of doubles.” The company doubled deployed sites, nearly doubled revenue, more than doubled gross margins, and doubled the number of stores served to over 3,000.
The growth was driven by strong demand trends as well as Symbotic’s long-term partnership with Walmart. Symbotic holds exclusive rights to update automation across all 42 of Walmart’s regional distribution centers.
And for next quarter, the company expects revenue growth to accelerate further to 70-79%, with positive adjusted EBITDA continuing. If Symbotic keeps executing, rapid growth could continue for years.
What Does Symbotic Do?
For those just discovering Symbotic, what exactly does this tech company do? Symbotic develops and deploys advanced warehouse automation systems, using AI and autonomous robots to revolutionize storage and order fulfillment.
The company estimates that just a single $50 million Symbotic system investment can generate $250 million in total customer savings over 25 years. The technology maximizes efficiency and throughput while lowering operating expenses.
Symbotic’s systems handle critical warehouse tasks like:
- Automated pallet storage and retrieval
- Robotic case handling
- Automated packaging stations
- Advanced inventory tracking
Top customers like Walmart, Target, and Albertsons are now modernizing warehouses using Symbotic’s cutting-edge capabilities. The global warehouse automation market is expected to reach $30 billion by 2030, giving Symbotic massive room for long-term expansion.
Understanding Symbotic’s Valuation
If Symbotic is posting such tremendous growth in a large addressable market, how expensive is the stock following the recent 40% surge? Valuing freshly public companies can be challenging, and Symbotic is no exception.
At first glance, Symbotic might look reasonably valued with its reported $3.8 billion enterprise value – approximately 2x next year’s projected $1.8 billion in sales. However, it has a dual-class share structure, so its actual market capitalization is far higher at around $30 billion.
That means SYM stock currently trades at a lofty 17x fiscal 2024 projected revenue. The price-to-sales multiple falls to 12x 2025 projections if growth continues as expected, but still seems stretched.
Justifying the premium valuation long-term requires market leadership, continued rapid expansion, and eventual profitability. Symbotic must also diversify revenue away from Walmart over time. Execution risks remain.
Bottom Line: Speculative But Intriguing Pick
After quadrupling over the past year and achieving a $30 billion market cap, Symbotic stock certainly isn’t low-risk. The current valuation leaves little room for error and baked-in expectations are clearly sky-high.
However, the impressive Q4 beat and profitability milestone also demonstrate Symbotic’s massive potential. If this warehouse automation pure-play can maintain growth momentum over the next several years, today’s high price tag may ultimately prove justified.
For investors comfortable with some speculation, Symbotic still seems like an intriguing way to play the automation trend that remains in early innings. The company is one to watch closely in 2023 as profitability efforts now take center stage.
Disclaimer
The information provided is for educational purposes and does not constitute financial advice. Investors are encouraged to conduct thorough research and consult with financial professionals before making investment decisions.