AI Stock Symbotic Plunged 36% on Wednesday Due to Accounting Errors. What Should Investors Do?

The past is the past. To me, it’s more concerning that the company lowered its guidance for the current quarter: “Symbotic now expects revenue of $480 million to $500 million, and adjusted EBITDA of $12 million to $16 million.”

The company did not include the prior guidance in its release. That required me to have to pull up its Nov. 18 document in order to determine the degree of the guidance cuts. The prior Q1 outlook was as follows:

Lowering the midpoint of the Q1 revenue guidance from $505 million to $490 million is not that concerning. However, chopping the midpoint of the outlook for adjusted EBITDA — a key profitability metric — from $29 million to $14 million — is a big deal. This is slightly more than a 50% cut.

Profitability metrics drive stock valuations. So given the nearly 52% haircut in the Q1 adjusted EBITDA guidance, it makes good sense that investors drove Symbotic stock down by 36% on Wednesday. Indeed, a case could be made that the decline in the stock could have been worse, and in the ballpark of 52%.

The stock hypers and presumably the short-sellers (those who make money when a stock’s price declines) were out in full force on Wednesday making comments about Symbotic stock on various financial and social media sites.

Some commenters were opining that Symbotic stock’s sell-off was overdone, with the accounting errors amounting to “no big deal.” Others were saying that the situation could turn into “another Super Micro Computer.” (The U.S. Department of Justice reportedly began a probe of the computer server specialist in September after a well-known short-seller released a report alleging accounting manipulation and other concerning issues.)

My opinion, based on the available data, is that Symbotic stock’s sell-off was deserved. But the available data does not support a comparison to Supermicro.

That said, until the company’s 10-K for fiscal 2024 is filed with the SEC, investors should remember that additional relevant data could be forthcoming.

Until Symbotic files its 10-K for fiscal 2024, investors cannot make informed investing decisions about its stock. So, long-term investors should not be tempted to buy the stock until they are able to review the company’s official fiscal 2024 results on the 10-K filing.

Symbotic stock could be very volatile for a while as day traders play tug-of-war with it.

Symbotic uses Nvidia‘s graphics processing unit (GPU) chips in at least some of its AI-powered robots. This isn’t surprising as Nvidia’s chips and related technology are being used for training and deploying autonomous machines of various types, including robots.

Indeed, Nvidia stock is the best way to invest in robotics, a market that has significant growth potential, thanks largely to recent advances in AI.

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Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Walmart. The Motley Fool has a disclosure policy.

AI Stock Symbotic Plunged 36% on Wednesday Due to Accounting Errors. What Should Investors Do? was originally published by The Motley Fool