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Impinj Falls 36% in 3 Months: Should You Buy, Sell or Hold the Stock?

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Impinj (PI - Free Report) shares have plunged 36.1% over the past three months, underperforming the Zacks Computer and Technology sector and the S&P 500 index’s return of 2.9% and 0.8%, respectively. Impinj has also underperformed its Zacks Electronics – Semiconductors peers, including Ambarella (AMBA - Free Report) , Marvell Technology (MRVL - Free Report) and Credo Technology Group’s (CRDO - Free Report) rise of 29%, 41.6% and 87.6%, respectively.

While the recent sell-off has been disheartening for investors, the underlying factors and long-term prospects suggest this might not be the time to panic.

Reason Behind Impinj Stock's Underperformance

The sharp drop in Impinj’s stock price is primarily attributed to disappointing guidance for the fourth quarter of 2024. Management flagged a seasonal decline in endpoint IC revenues, a predictable trend in the supply chain and logistics sectors. Additionally, delays and timing issues in major projects with supply chain and logistics customers are expected to weigh on revenues, particularly affecting its E-family reader ICs.

Impinj’s 3 Month Price Performance Chart

Zacks Investment Research
Image Source: Zacks Investment Research

This short-term turbulence has understandably rattled investors, especially given Impinj’s premium valuation relative to its industry peers. It currently trades at a forward 12-month price-to-sales (P/S) multiple of 9.54x, above the industry average of 8.25x. While this premium underscores Impinj’s market leadership, it also limits immediate upside potential in a volatile market environment.

Impinj (P/S) F12M Chart

Zacks Investment Research
Image Source: Zacks Investment Research

Additionally, PI stock is currently trading below the 50-day moving average, indicating a bearish trend in the near term.

50-Day Moving Average Indicate Bearish Trend

Zacks Investment Research
Image Source: Zacks Investment Research

Why Impinj’s Growth Story Remains Compelling

Despite the turbulence, Impinj's fundamentals point to a promising future. The company’s specialized RFID technology, RAIN, offers wireless item-to-cloud connectivity, addressing critical needs across industries, such as retail, logistics, healthcare, and food and beverage.

In recent years, PI has expanded its offering by integrating cloud and software capabilities. These innovations enhance its RAIN technology, allowing customers to leverage data analytics, real-time tracking, and software integration. This strategic pivot not only differentiates Impinj but also opens up recurring revenue streams — a key driver for sustained growth.

Emerging use cases also highlight Impinj's relevance. From apparel and food tagging to tracking perishable goods, its solutions are increasingly indispensable. The company’s focus on high-growth areas, such as quick-service restaurants and grocery tagging pilots, underscores its ability to tap into new markets with substantial potential.

Impinj’s Product Traction Amid Headwinds

Impinj's M800 endpoint ICs, which enable unique identification and tracking of physical items, have seen robust adoption over the past three quarters. Even as project delays have dampened some revenue streams, demand for these ICs remains a bright spot, with continued growth expected in 2025.

While short-term challenges like supply chain delays and seasonal dips weigh on performance, these issues don’t undermine the broader demand for Impinj's solutions. The company’s ability to stay relevant in a competitive landscape strengthens its long-term investment case.

Analysts are also optimistic about Impinj’s growth prospects. The Zacks Consensus Estimate for 2025 revenues and earnings suggests year-over-year growth of 19.5% and 33.9%, respectively. The stock has surpassed the consensus mark for earnings in the trailing four quarters, the average surprise being 173.2%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Conclusion: Hold Impinj Stock for Now

The recent pullback in Impinj’s stock price reflects near-term challenges and valuation pressures. However, its leadership in RFID technology, expansion into software and cloud services, and growing presence in emerging use cases signal a solid growth trajectory.

For long-term investors, these fundamentals justify holding the stock despite its premium valuation. While patience may be required as the company navigates its current hurdles, Impinj remains well-positioned to capitalize on the increasing adoption of RFID solutions across a variety of sectors. Impinj carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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