One of the standouts of today's afternoon trading session has been Symbotic, which logged a -7.9% drop and underperformed the S&P 500 by -8.0%. The Farm & Heavy Construction Machinery stock is now trading at $35.75 per share and is -30.81% below its average target price of $51.67. Analysts have set target prices ranging from $10.0 to 65.0 dollars per share, and have given the stock an average rating of buy.
The market, on the other hand, is a bit more pessimistic. Symbotic's short interest -- meaning the percentage of its share float that is being shorted on an expectation of a price decline -- is quite high at 29.8%. The float includes only shares that are available for public trading, and excludes preferred shares.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Symbotic, institutional investors own 76.1% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in SYM, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
To sum up, Symbotic is probably the subject of mixed market sentiment because of an analyst consensus of strong upside potential, a buy rating, an unusually large proportion of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about SYM:
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The stock has trailing 12 month earnings per share (EPS) of $-0.25
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Symbotic has a trailing 12 month Price to Earnings (P/E) ratio of -143.0 compared to the S&P 500 average of 28.21
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The company has a Price to Book (P/B) ratio of 8.68 in contrast to the S&P 500's average ratio of 4.71
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Symbotic is a Industrials company, and the sector average P/E and P/B ratios are 25.19 and 3.17 respectively
