We came across a long thesis on Sonos Inc (NASDAQ:SONO) on ValueInvestorsClub by starfox02. In this article we will summarize the bulls’ thesis on SONO. The company’s shares were trading at $12.53 when this thesis was published, vs. closing price of $15.04 on Dec 31st.
© Sonos Inc
Sonos Inc (NASDAQ:SONO) is a provider of home sound systems, with a product portfolio including speaker sets and other accessories like mounts, stands, cables and networking. The company is widely known for pioneering multi-room, wireless audio products, debuting the world’s first multi-room wireless sound system in 2005. As of 2024, the company has a large client base operating nearly 50.4 million products registered in approximately 16.3 million households globally.
The author’s bull thesis is centered around the idea of investing in SONO at a time when the company faces headwinds from softening consumer demand, and more importantly, a time when the company’s brand and reputation appear damaged by a disastrous app update in 2023, which messed up the product features, user experience and delayed several product launches. Despite the backlash and angry customer reviews following the update, the author believes that an investment in SONO is warranted by appropriate steps being taken to fix the app, as well as simply by a lack of alternatives for better products – extensive market research shows that clients not only can’t find a suitable provider to switch to, but also continue to buy both existing and new products from Sonos. Optimism regarding the company’s future is further reinforced by lack of debt on the balance sheet and more than $100 million adjusted EBITDA generated in FY2024 alone.
All in all, despite Sonos Inc (NASDAQ:SONO) not being cheap on near-term metrics, the author argues that by taking a long-term approach, with the belief that the app will be totally fixed and the brand reputation will recover, the stock can deliver 50-100% return in the next several years.
While we acknowledge the potential of SONO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SONO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.