Symbotic is an AI powered warehouse automation play. It hits all the trending buzz words that make notoriety seem inevitable. It’s a great company long term that also seems like it could generate “meme stock” potential short term in a frothy enough market. Current analyst forecasts have an average price target of $53.44, the highest price target being $62.00
Symbotic has a lot going for it and I like this company long term.
Many headwinds facing companies are tailwinds for Symbotic: SYM 0.00%↑ alleviates labor shortage issues. It helps companies adjust their strategies to meet the changing demands of e-commerce.
The customer pays $50 million for the system and saves $10 million annually, or $250 million over the system’s 25 year useful life.
They continue to add big name clients to their customer base that includes Walmart, Target and Albertsons, demonstrating the usefulness of the system and demand for it. The Greenbox Joint Venture with SoftBank is poised to start bringing in revenue by the end of 2024. This will open up a huge new addressable market as the Symbotic system has historically only been fit for large companies. Greenbox will open it up to smaller companies that may not be able to afford a full traditional system or have small enough inventory needs that they can share a warehouse with other companies, something other systems on the market are not capable of catering to.
This is a company I think is deserving of a small position to tuck away and see where it goes. The way I look at it is if you put 1% of your portfolio into it and it doesn’t work out, ok you lost 1%. If it does work out you do quite well. Google trends seems to give us good indicators of when to buy. I would either start or add to a position when the trends are low as this seems to correlate with the lowest stock prices.
As you can see the interest in the stock demonstrated by google trends correlates with the highs and lows. The stock and interest both peak and bottom in tandem. If I were to judge it today by this metric, it is a decent buy right now, but it becomes an excellent buy if it continued to go down to the $40 and below area.
So, you can either wait or sell puts, taking advantage of high premiums from volatility and get paid to wait for a better entry. This is the strategy I’ve been utilizing along with selling covered calls and I’m essentially turning this into a free position. Here are all the trades you can see I’ve made on Symbotic which earned me $4845.56.
P.S. I share all these trades in real time with community members.
On to recent news. Let’s start with the bad. The company recently issued 10 million new shares, diluting shareholders. This was a fear I had outlined in previous posts on Symbotic and predicted it would continue, the company has been steadily increasing the share count by quite a lot. That, companied with the growth rates seeming to start slowing down, could present problems for the stock in the short term. Or, if you believe in the company long term, an opportunity.
This is something to keep an eye on, the company had 58 million shares outstanding as of Q1 2023, up to 83 million in the most recent quarter Q1 2024 and has since added 10 million more. 93 million shares outstanding, nearly a double year over year.
I predict this dilution will continue and the growth rate will continue to trend down, which would cause the stock price to drop short term. If it did have a decent pull back I would add to my position as I do believe in the company long term.
On to the good. We got news of many institutions increasing their stake in Symbotic. LPL Financial LLC increased their position by 578% in Q3. They now own over 102,000 shares worth $3.4 million. Other notable names increased their stakes significantly as well, including Blackrock, Vanguard and more:
Article: https://www.defenseworld.net/2024/03/11/lpl-financial-llc-purchases-87006-shares-of-symbotic-inc-nasdaqsym.html
Finally, the technical analysis. Symbotic seems to be in an overall downtrend as you can see since December it has had a series of lower highs. In the last week it has been going up, though it is being met with a lot of selling pressure. It’s currently above all its moving averages. I think when it crosses the 200 day moving average, the black line which currently sits around $42, I would look to buy more. In the past whenever it crosses that line it quickly snaps back higher as you can see on the chart every time it has crossed that black line, it has quickly gone up.
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Thanks for the info