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Shares of iRobot Corporation (IRBT - Free Report) were down more than 13% through early afternoon trading Wednesday after a new competitor entered the household robotic appliances market.
SharkNinja, the maker of Shark vacuums and Ninja kitchen appliances, unveiled its new Shark ION Robot, an automatic cleaning and charging robotic vacuum, on Wednesday. The product announcement caused Spruce Point Capital, a notable short-selling firm, to reiterate its “Strong Sell” rating for iRobot.
“SharkNinja has a proven track record of disrupting numerous home appliance markets with dynamic market strategies, and superior products,” Spruce Point said. “With 88% US market share, iRobot's share can only go down from here.”
In a way, Spruce Point is objectively correct here. iRobot and its Roomba robotic vacuum have enjoyed years as the only household name in this market, and now that there's a serious competitor in the mix, the company will almost certainly forfeit some market share.
And SharkNinja has certainly proven that it can make a splash in a new industry. As Spruce Point highlighted, SharkNinja has improved its share of the U.S. vacuum cleaner market from 1% in 2008 to 20% today.
However, Spruce Point's assertion that iRobot shares “can only go down from here” seems to imply that there's no further room for overall growth in the household robotics market. In reality, this industry is still in its infancy, and there should be plenty of expansion opportunity for iRobot, SharkNinja, and future competitors down the line.
Nevertheless, investors seem worried that SharkNinja could threaten iRobot's reign at the top of the household robotics business. IRBT is on track for its biggest one-day slump of the year, and the stock has now dropped 20% from the highs it witnessed in late July.
What's more, iRobot may have more than just SharkNinja to worry about. Appliance giant Bosch recently launched its first robotic vacuum, the Bosch Roxxter, and Swedish appliance maker Electrolux (ELUXY - Free Report) has also debuted an automated vacuum.
For basically the first time in company history, iRobot is faced with serious competition in its bread-and-butter market. Still, some investors will reasonably believe that the household robotics market is a long-term play with plenty of profit potential to go around.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Why Did iRobot (IRBT) Stock Plummet Today?
Shares of iRobot Corporation (IRBT - Free Report) were down more than 13% through early afternoon trading Wednesday after a new competitor entered the household robotic appliances market.
SharkNinja, the maker of Shark vacuums and Ninja kitchen appliances, unveiled its new Shark ION Robot, an automatic cleaning and charging robotic vacuum, on Wednesday. The product announcement caused Spruce Point Capital, a notable short-selling firm, to reiterate its “Strong Sell” rating for iRobot.
“SharkNinja has a proven track record of disrupting numerous home appliance markets with dynamic market strategies, and superior products,” Spruce Point said. “With 88% US market share, iRobot's share can only go down from here.”
In a way, Spruce Point is objectively correct here. iRobot and its Roomba robotic vacuum have enjoyed years as the only household name in this market, and now that there's a serious competitor in the mix, the company will almost certainly forfeit some market share.
And SharkNinja has certainly proven that it can make a splash in a new industry. As Spruce Point highlighted, SharkNinja has improved its share of the U.S. vacuum cleaner market from 1% in 2008 to 20% today.
However, Spruce Point's assertion that iRobot shares “can only go down from here” seems to imply that there's no further room for overall growth in the household robotics market. In reality, this industry is still in its infancy, and there should be plenty of expansion opportunity for iRobot, SharkNinja, and future competitors down the line.
Nevertheless, investors seem worried that SharkNinja could threaten iRobot's reign at the top of the household robotics business. IRBT is on track for its biggest one-day slump of the year, and the stock has now dropped 20% from the highs it witnessed in late July.
What's more, iRobot may have more than just SharkNinja to worry about. Appliance giant Bosch recently launched its first robotic vacuum, the Bosch Roxxter, and Swedish appliance maker Electrolux (ELUXY - Free Report) has also debuted an automated vacuum.
For basically the first time in company history, iRobot is faced with serious competition in its bread-and-butter market. Still, some investors will reasonably believe that the household robotics market is a long-term play with plenty of profit potential to go around.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>