SYM Stock up 23%, Announces New Partnership
SYM 0.00%↑ stock is up 23% this week and is set to report earnings on Monday.
Symbotic is a warehouse automation company, if you’d like to learn more about the company, read my last article here:
The company just announced a strategic agreement with Southern Glazer’s Wine & Spirits, the largest wine and spirits distributor in the US. It operates in 44 states and was the 11th largest private company in the US as of 2021.
They are slated to implement the first Symbotic systems in 2025.
Above is an image from the company website, it looks like Symbotic’s system is a perfect fit for this distribution center.
Symbotic’s end to end automation system will help Southern Glazer’s to improve all around efficiency.
This is a major partnership as Symbotic is moving into a new vertical and other companies in this industry will have to follow Southern Glazer’s to stay competitive.
There was no mention of the Green Box joint venture with Soft Bank that Symbotic recently announced, which sought to bring their system to smaller companies.
Their only customers so far have been massive companies like Walmart, who is set to report earnings tomorrow and I’ll be looking to see if they give an update on their warehouse automation efforts.
But with $21 billion of revenue and 22,500 employees in 2021, Southern Glazer’s is a big company and Symbotic previously guided they planned to bring on 1-2 new customers a year, we’ll see if they confirm this guidance on Monday.
Technical Analysis
Symbotic has been on quite the run with the rest of the market. It is above all its moving averages, the 5 lines you see above. The black line is the 200 day moving average, which is currently sitting at around $33. It has acted as support in the past and that’s the level I would start to consider buying more.
The MACD (bottom graph) seems to be coiling up and about to flip positive.
I’m not rushing out to buy here as the WMT 0.00%↑ report tomorrow will probably move the market. I plan to hold my 200 shares and if it continues to go up, I will decide if I want to sell covered calls, based on the earnings results Monday.
Conclusion
As labor costs rise, consumers demand faster delivery times and worker safety remains an issue, warehouse automation is one frontier humanity is hurtling towards as part of the onset of artificial intelligence.
Symbotic is uniquely positioned to meet the needs of this growing market and continues to add customers. I think it’s overvalued here and I’m extremely cautious these days so I’m not planning to buy more at these levels. After this massive run up the market is definitely feeling a little frothy.
Amazon is doing a lot with warehouse automation, but so far, it seems they plan to keep the technology to themselves. I think Symbotic has huge potential, for the right price.
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Until next time!