iRobot stock is up 32% for the one-year period through Nov. 10, despite getting clobbered for a couple of months. The S&P 500 has returned nearly 22% over the same period.
We can attribute October's stock price drop to continued concerns about increasing competition in the robotic vac market overshadowing iRobot's solid third-quarter results. On Oct. 26, iRobot shares dropped 13.5% following the company's release of its earnings the afternoon before. Revenue grew 22% over the year-ago quarter, both the top and bottom lines beat Wall Street's expectations, and the company increased its full-year 2017 outlook. Nonetheless, some investors remain jittery about rising competition in the company's bread-and-butter market, particularly from SharkNinja.
In early September, the privately held U.S.-based company launched its Shark Ion Robot 750 at a price point near the lower end of iRobot's price range for its Roomba line. A week later, iRobot's stock plunged nearly 16% following a short-seller's renewed attack, largely centered on the premise that SharkNinja's engineering and marketing chops will enable it to take market share from iRobot.
Potentially compelling new competitors should never be taken lightly. That said, iRobot has continued to thrive in the market that it created, despite many companies vying for a substantial piece of its robotic-vacuum pie. The company maintains its leadership position by constantly improving its products.
A key thing for investors to keep in mind is that the robotic-vacuum market is expanding rapidly in both the U.S. and internationally. So iRobot has the potential to continue to grow very nicely even if a new competitor or two takes some market share.