Speaker and audio products maker Sonos, Inc (NASDAQ:) stock has been a strong performer in 2021 as it rides multiple tailwinds to new highs. The maker of audio products has been on a tear as a near-perfect storm of tailwinds produced extensive top and bottom line gains.
The Company was a winner during the pandemic but is proving to be a post-pandemic winner as the reopening gets underway with the acceleration of . Students are returning to school and workers returning to the office. However, they are not giving up on , audio, podcasts, and music they’ve enjoyed at home. In fact, consumers are upgrading with the strength of streaming content to better experience the theater effect at home not just visually but auditorily as well.
The Company also received news that the ITC (International Trade Commission) ruled that Google (NASDAQ:) (NASDAQ:) infringed on five patents, opening up the possibility of IP licensing revenues. Prudent investors seeking a reopening play with tailwind legs and potential IP licensing revenue wins can watch for opportunistic entries on Sonos shares.
Q3 FY 2021 Earnings Release
On Aug. 11, 2021, Sonos released its fiscal third-quarter 2021 results for the ending June 2021. The Company reported an earnings-per-share (EPS) profit of $0.12 excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.06), beating estimates by $0.18. Revenues rose 51.9% year-over-year (YoY) to $378.67 million beating analyst estimates for $315.2 million.
Sonos CEO Patrick Spence commented:
“Our third quarter results represent yet another record-shattering quarter at Sonos. We believe that the strong demand for our products is unwavering and underscores the uniqueness and power of our business model where customers start with one product and expand with more over time. Based on the strong demand for our products, the amazing execution of our team, and the power and profitability of our business, we are yet again raising our outlook for fiscal 2021.
“Our future has never been brighter, as there are three macro trends that position Sonos for continued growth in the large and growing global audio market. First, the ‘Golden Age of Audio’ – as the leading premium home audio brand, we are well-positioned to capitalize on the continued increase in audio content consumption and new audio formats that are emerging.
“Second, ‘Hollywood at Home’ – with more video content going direct-to-home, consumers are demanding a theater-like audio experience in the home which Sonos is well positioned to provide. Third, ‘The Great Reshuffling’ – the untethering of people from their offices enabling flexibility on how and where to live will drive continued investment in the home, a trend that our premium brand, design, and quality is well-suited to capitalize on.”
Upside Full-Year Guidance
Sonos provided upside estimates for full-year fiscal 2021. The Company expects full-year 2021 revenues to range between $1.695 billion to $1.710 billion (up from $1.625 billion to $1.675 billion earlier guidance) compared to $1.67 billion consensus analyst estimates. There were fears of losses from Apple (NASDAQ:) a year ago when they removed speaker products (other than its own) in its stores, but the $99 co-branded speaker strategy with IKEA has offset much of the blowback.
Sonos also built a co-branding with North Face and will push into the automotive market with car speakers for Audi. The platform agnostic nature of its products not only make it appealing to a larger demographic of consumers, but also a potential acquisition target as it continues to grow its IP portfolio and distribution base.
SONO Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for SONO stock. The weekly rifle chart downtrend was abruptly reversed on its earnings reaction. Shares spiked sharply to peak off the $42.58
The weekly 5-period moving average resistance is now a support as it rises at $35.40. The weekly market structure low (MSL) buy triggers on the $37.77 breakout. The weekly market structure high (MSH) sell trigger sits at the $35.75 fib breakdown. The weekly stochastic has crossed back up towards the 40-band indicating fresh buying momentum.
The daily rifle chart uptrend has stalled with the 5-period MA flattening at $36.15 and 15-period MA rising at $35.95. The daily stochastic formed a mini inverse pup down through the 80-band and continuing to fall towards the 50-band as the channel tightening continues towards the 15-period MA.
The bullish case would be a bounce off the 15-period MA through the daily 5-period MA accompanied by the daily stochastic cross up. The bear case is continued fall on the daily stochastic mini inverse pup as the 5-period MA crosses down through the 15-period MA.
Prudent investors can watch for opportunistic pullback levels at the $36.36 fib, $35.75 daily MSL trigger/fib, $34.83 fib, $33.92 fib, $32.88 fib, $32.12 fib, and the $30.99 fib. Upside trajectories range from the $44.45 fib up towards the $58.53 fib.