Symbotic Inc. Stock Plummets Following Delay in 10-K Filing and Revenue Recognition Errors

Symbotic Inc. (NASDAQ: SYM) experienced a significant decline in its stock price on Wednesday, November 27, 2024, following the announcement that the company would delay the filing of its annual Form 10-K for the fiscal year ended September 28, 2024. The delay is attributed to the discovery of errors in revenue recognition related to cost overruns on certain deployments that are not billable.

The stock price of Symbotic Inc. dropped by approximately 24% in premarket trading, reflecting investor concerns over the financial impact of these errors. The company disclosed that the errors affected system revenue, gross profit, income before income taxes, and adjusted EBITDA for fiscal 2024, necessitating corrections to previously reported financial results for the second, third, and fourth quarters of the fiscal year.

Symbotic estimates that these adjustments will reduce the relevant financial metrics by $30 million to $40 million. As a result, the company plans to revise its financial information for the fourth quarter and full fiscal year, which was initially released on November 18, 2024. The interim financial statements for the first three quarters of fiscal year 2024, along with the preliminary unaudited financial results for the fourth quarter and the full fiscal year, should not be relied upon.

In response to the error, Symbotic is implementing measures to strengthen its internal controls over financial reporting to address material weaknesses that contributed to the issue. The company has also revised its outlook for the first quarter of fiscal 2025, expecting revenue of $480 million to $500 million, down from its prior forecast of $495 million to $515 million, and below analysts’ consensus estimate of $508.4 million.

Additionally, Symbotic’s adjusted EBITDA guidance was lowered to a range of $12 million to $16 million, compared to the previous estimate of $27 million to $31 million and the consensus expectation of $33.7 million. This revision further reflects the financial impact of the identified errors.

The news also prompted several analyst firms to adjust their ratings and price targets for Symbotic. For instance, DA Davidson downgraded Symbotic from a “buy” rating to a “neutral” rating with a reduced price target of $35.00, down from $50.00.