Spruce Point is pleased to release a 60+ page investment research report on iRobot Corporation (NASDAQ:IRBT) with a ‘Strong Sell‘ opinion and a $20-$25 price target.
Please visit our website for the full report at www.sprucepointcap.com:
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Cautious of Investing in iRobot Corporation
In Spruce Point’s Opinion, There Are Numerous Reasons to be Cautious of Investing in iRobot Corporation (NASDAQ:IRBT) and We Are Short the Stock:
1. iRobot Corporation (NASDAQ:IRBT) has become the poster boy stock for a “Robotics Revolution.” Similar to the investment public’s euphoria for 3D printing stocks, we believe investor’s enthusiasm for robotic stocks is rooted in speculation, overvaluation, and will result in significant disappointment and financial losses. We note that much of the hype came from Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s announcements of investments in drones and robotics. However, we observe that the actual size of the investments have been small, and in areas unrelated to iRobot’s core competencies. Instead, we have analyzed underlying trends in venture capital funding for robotics companies, and find that overall investment was stagnate between 2012-2013 at ~$190m per yr, and trending downward by -15% YTD 2014. These are hardly indicators of an explosive revolution in robotics.
2. In reality, iRobot Corporation (NASDAQ:IRBT) is nothing more than a play on the robotic vacuuming market, which we believe is facing mounting competition from dozens of lower cost competitors.
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