What happened

iRobot (IRBT -0.66%) shareholders lost ground to a slumping market this week. The robotic-device specialist's stock shed 10% through Thursday trading, compared to a 2.8% drop in the S&P 500, according to data provided by S&P Global Market Intelligence. That drop pushed shares to a new low for the year, down 44% since the start of 2021.

The decline wasn't driven by specific operating news out of the company, but instead, by general investor fears about its short-term earnings prospects.

So what

iRobot's last earnings report showed continued solid demand for its robotic-cleaning devices through early April. Revenue rose 33% in the core U.S. market, for example, and jumped 25% in Japan. Yet there were also signs of significant stress on the business.

iRobot's adjusted gross profit margin fell to 34.5% of sales from 40.7%, despite an earnings boost provided by the temporary lifting of Chinese import tariffs. The company's operating expenses jumped, too, so that losses landed at $23 million, compared to a profit of $6 million a year earlier.

The company also revealed declining sales volumes that were more than offset by increasing average prices. Those factors have investors worried about potentially weaker revenue results ahead, especially if a recession is on the way. iRobot's growth-stock status and net losses expose shareholders to the kind of volatility that investors saw this week, especially when markets are falling.

Now what

iRobot will update investors about its latest demand and pricing trends when it issues its second-quarter earnings report in a few weeks. That announcement might contain further signs of weakening earnings over the short term, even though the company has benefited from lower tariff charges.

IRBT Cash from Operations (TTM) Chart

IRBT Cash from Operations (TTM) data by YCharts.

Investors are worried about those charges potentially returning in 2023. But the biggest factor pushing iRobot's stock down right now is the prospect for declining sales volumes and more net losses ahead.