Spectacular Break-in: Symbotic Struggles with Balance Sheet Issues

Symbotic shares, a company specializing in warehouse automation, fell more than 35% on Wednesday after the Walmart-backed company postponed the filing of its annual report. The delay is attributed to "material weaknesses" in the internal control system over financial reporting. Symbotic states that it needs more time to assess the financial impact of a revenue recognition error affecting the fiscal year ending September 28, 2024. The company, which has been publicly traded since June 2022, builds and operates robotic warehouse systems for major retailers such as Walmart, Target, Albertsons, and C&S Wholesale. In January 2024, Walmart owned a 14.5% stake in Symbotic, according to LSEG data. Just last week, Symbotic had to revise its quarterly finances for the fiscal year 2024, as some revenues were recorded earlier than the actual period. Despite initial commitments to submit the annual report on time, Symbotic later identified additional errors affecting key metrics such as gross profit and net income. The company expects that the total corrections will reduce revenue, gross profit, and adjusted EBITDA by 30 to 40 million dollars. With a decline of about 27% this year, the stock was recently traded at $24.44. Should the losses persist, the company’s market value could drop by approximately 7.59 billion dollars from the initial 21.91 billion dollars. Symbotic has a low free float of just over 86 million shares, representing about 15% of outstanding shares, making it susceptible to significant price fluctuations. Additionally, the company lowered its forecast for the current quarter and now expects revenue of 480 to 500 million dollars, compared to the previous expectations of 495 to 515 million dollars.