What happened

Shares of automotive and consumer electronics brand VOXX International (VOXX), popularly known as Audiovox, crashed on Tuesday after reporting a big decline in earnings last night, and an earnings miss as well. As of 11:30 a.m. ET today, shares are down 24.3%

Analysts had forecast that Audiovox would earn $0.11 per share in its fiscal 2023 first quarter, equivalent to the $0.11 the company earned in the year-ago quarter. Instead, it reported a loss of $0.27 per share when calculated according to generally accepted accounting principles (GAAP).    

So what

CEO Pat Lavelle blamed supply chain issues in the automotive sector, and in particular a continued dearth of the semiconductor chips needed to build its products, for the fiscal first-quarter miss. Meanwhile, on the consumer electronics front, Lavelle noted that retailers already holding high levels of inventory slowed their rate of buying from the company.  

As a result, automotive segment sales slid 7% in the first quarter, and consumer electronics sales fell 5%. Overall, sales declined 6% year over year to $128.7 million, the effect of which was compounded by a 100-basis-point decline in gross profit margins to 25.8%. Add in the effect of operating costs rising 8%, and you can see why the bottom-line number flipped from a profit to a loss.

Now what

And don't expect this news to get any better anytime soon. "These challenges will persist," Lavelle warned in his earnings report, and investors might need to "look out over the next few years" before a glimmer of hope returns.

Long term, Lavelle points to "over $750 million in new [original equipment manufacturer] awards received over the past three years" as reasons for optimism, and says he still hopes Audiovox can expand its premium audio business even as it seeks "new opportunities" to grow a nascent biometrics business.

That being said, when you get right down to it, I'm afraid this is a consumer-dependent business on the cusp of a recession -- and already on track to record its fourth money-losing year out of the past five.

Analysts remain optimistic about the stock, forecasting a return to profits next year, and the shares look attractively valued at just over 9x forward earnings. But VOXX International stock looks to me to be in trouble -- and probably too risky to buy.