Symbotic Inc (SYM) has announced a delay in submitting its Annual Report on Form 10-K for the fiscal year ended September 28, 2024, due to significant issues with revenue recognition. The Wilmington, MA- based robotics company identified errors in how it accounted for cost overruns on certain deployments, leading to an overstatement of system revenue, gross profit, income before tax, and adjusted EBITDA for several quarters in 2024. This revelation has prompted a sharp 38% drop in Symbotic’s stock in early trading hours.
The financial restatements are expected to reduce the reported figures by $30 million to $40 million for fiscal year 2024 compared to the financial results released on November 18, 2024. As a consequence, Symbotic has revised its revenue and EBITDA expectations for the first quarter of fiscal 2025, lowering both forecasts from previous estimates. The company’s new revenue projection for Q1 2025 is set between $480 million and $500 million, down from an earlier range of $495 million to $515 million, with adjusted EBITDA now anticipated to be between $12 million and $16 million, significantly less than the $27 million to $31 million previously projected.
In light of these financial discrepancies, Symbotic said it is taking steps to strengthen its internal control over financial reporting. The company plans to file its Form 10-K and amend its quarterly reports on Form 10-Q within the allowed 15-day extension period. Moreover, Symbotic has advised that its financial statements from November 18, 2024, should not be “relied upon,” and it will amend its Current Report on Form 8-K to reflect this.
Despite these setbacks, Symbotic has not been without its advocates. Jim Cramer, on CNBC’s “Mad Money Lightning Round,” described Symbotic as a significant investment opportunity, highlighting its profitability and the growth potential within its sector.
“…[T]is company does make money. And so, therefore, I am going to bless it as a buy,” Cramer stated.
However, the recent financial adjustments and the subsequent impact on stock performance tell a different story for current investors, with Symbotic’s stock down 54% year-to-date.
This development underscores the challenges companies face in maintaining accurate financial reporting and the potential repercussions on investor confidence and stock performance. Symbotic’s situation is a reminder of the importance of robust internal controls and the immediate impact of financial restatements on market perception and stock valuation.
Price Action: SYM stock was last seen down 41% in early trading on Wednesday, at $22.30.
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