Walmart-Backed Symbotic Shares Plunge After Accounting Errors

Walmart-Backed Symbotic Shares Plunge After Accounting Errors

Key Takeaways

* Symbotic, an AI-driven warehouse technology company backed by Walmart, announced accounting errors that significantly impacted its financial reporting.

* The company is delaying its annual report and revising its current-quarter outlook as it addresses these issues.

* Symbotic’s shares tumbled nearly 40% in intraday trading following the announcement.

Accounting Errors Delay Symbotic’s Annual Report

Shares of Symbotic (SYM) plummeted Wednesday after the company disclosed material weaknesses in its financial reporting for the fiscal year ending September 28, 2024. The announcement included delays in filing its annual Form 10-K and revisions to its current-quarter guidance.

Symbotic stated that additional time is needed to evaluate the financial impact of an error related to system revenue recognition and its effect on internal controls over financial reporting. This issue pertains to premature expense recognition tied to milestone achievements, leading to accelerated costs being recorded before the corresponding milestones were met.

Revenue Recognition Errors Uncovered

Symbotic also uncovered further errors related to cost overruns on certain deployments that were not billable. These issues affected system revenue recognition in the second, third, and fourth quarters of 2024.

As a result, the company indicated that its previously reported fourth-quarter and full-year 2024 results should no longer be relied upon. The adjustments will impact several key financial metrics, including gross profit, net income (loss), and adjusted EBITDA.

Revised Revenue and Profit Forecasts

In light of these findings, Symbotic revised its outlook for the first quarter of fiscal 2025. The company now expects:

* Revenue: $480 million to $500 million (previously $495 million to $515 million).

* Adjusted EBITDA: $12 million to $16 million (down from $27 million to $31 million).

This marks a sharp contrast to a year ago when the company posted record revenue, driving its stock price higher.

Stock Impact

The announcement triggered a sharp selloff, with Symbotic shares plunging nearly 40% during intraday trading. The steep decline brings the stock’s year-to-date losses to more than 55%, leaving investors increasingly wary of its near-term outlook.