IRBT Stock Slumps After iRobot Lowers Q4 Outlook

IRBT stock

On Wednesday, iRobot Corp (NASDAQ:IRBT) shares tumbled over 14% after the company reportedly lowered its holiday quarter outlook. This is despite the company beating revenue and earnings estimates. The company cited US tariffs on their robotic vacuum cleaners as well as other issues as the reason for revising the Q4 guidance.

Impressive Quarter Exceeding Estimates

iRobot CEO Colin Angle indicated that the company delivered revenue growth of 9% after delivering a large shipment to a US retailer previously scheduled for Q4. Angle indicated that the company reported a strong quarter mainly because of disciplined spending and favorable gross margins. He added that iRobot has made considerable progress in diversification. The company equally executed the launch of the Roomba® s9and the Braava®Jet m6 mop successfully in Europe as well as the m6 in Japan.

The company reported an EPS of $1.24 on revenue of $289.4 million in the quarter relative to $264.5 million in 2018. iRobot has also lowered its FY guidance to EPS of between $2.60 to $2.80 on revenue of $1.2 billion to $1.21 billion. Initially, the company had expected FY earnings to be between $2.40 and $3.15 per share on revenue of $1.2 billion to $1.25 billion.

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At the time of writing, IRBT stock is down 14% at $47.44.

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iRobot dealing with Competition by Filing Patents

The company has been facing growing competition in recent times from established players and upstarts. On Tuesday, the company unleashed its patent strike on SharkNinja. It filed a motion to prevent the company from selling and distributing the new Shark IQ Robot vacuum.

Recently, Raymond James analyst Brian Gesuale reviewed his position on IRBT stock, citing growing competition. He specifically pointed to SharkNinja’s cheaply priced vacuum cleaner that is hurting iRobot’s brand as well as pricing power.

The move to file a motion to stop SharkNinja from selling its self-emptying Shark IQ Robot cleaner is not surprising. This is because it looks the same as iRobot’s Roomba i7+ vacuum cleaner that was launched last year. This will not be the first patent iRobot is filing as it is has a history of enforcing intellectual property across the globe.

IRBT stock has lost over 65% over the past six months after hitting a high of $132.88.

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