SONO Should I Buy
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SONO is not a good buy right now. Despite being deeply oversold (RSI ~16) and potentially due for a short bounce, the broader setup still leans bearish/unstable (price below key pivot, negative MACD, weak pattern-based forward probabilities, and recent market skepticism about growth). For an impatient buyer who doesn’t want to wait for confirmation, the risk of further near-term downside into/around the upcoming earnings (2026-02-03) outweighs the oversold bounce appeal.
Trend/structure: SONO is in a sharp downswing and currently trades below the pivot (15.117), which keeps the near-term trend biased lower. Momentum: MACD histogram is negative (-0.145) but contracting, which hints selling pressure may be easing; however it’s not a confirmed reversal. RSI(6) at ~15.9 signals extreme oversold conditions, which often precede reflex bounces—but oversold alone is not a buy signal without confirmation. Levels: Immediate support is S1=14.318 (price 14.23 is already below it), with next support S2=13.825. Resistance levels to reclaim are 15.117 (pivot) then R1=15.915. Practical read: odds favor additional volatility and potential continuation lower unless the stock quickly reclaims ~15.12 and holds it.
Product catalyst: Launch of Amp Multi (first new product in over a year) could re-energize the higher-end/custom installer channel and supports the narrative of improving the portfolio.
Margins: Gross margin improved to 43.69% in 2025/Q4 (+8.30% YoY), showing pricing/supply chain actions can help profitability potential.
Earnings event (2026-02-03 after hours): A strong print or upbeat outlook could trigger an oversold rebound and short-covering move, especially given the depressed price level.
Price action/news reaction: Shares dropped sharply (~14.8%) around the product news amid concerns about future growth—this is a clear sentiment headwind.
Profitability deterioration: 2025/Q4 net income fell to -$37.858M (more loss YoY) and EPS fell to -0.31, signaling operating challenges despite revenue growth.
Near-term statistical bias: Pattern-based projection provided indicates downside skew (next week/month both around -6%).
Earnings risk: With earnings close, disappointment risk is elevated and can overwhelm an oversold setup.
Latest quarter: 2025/Q4. Revenue grew to $287.9M (+12.73% YoY), showing top-line recovery/strength. However, profitability worsened: net income declined to -$37.858M (down -28.69% YoY) and EPS to -0.31 (down -29.55% YoY). A key bright spot is gross margin rising to 43.69% (+8.30% YoY), suggesting better unit economics, but the company still needs operating leverage/expense control to translate revenue growth into earnings.
Recent trend: Ratings/targets have improved but are not uniformly bullish. Morgan Stanley upgraded SONO to Equal Weight from Underweight (PT raised to $17 from $11) after Q4, citing pricing actions and supply chain improvements, but still noted shares are not 'overly cheap'—a neutral stance. Jefferies reiterated Buy and raised PT to $21 from $19, implying meaningful upside from current levels. Wall Street pros: improving execution on tariffs/pricing, margin improvement, and upside if the new strategy/products accelerate growth. Cons: skepticism on sustainable growth trajectory and the need for clearer acceleration; mixed conviction (one Buy vs one Neutral) suggests the bull case isn’t broadly decisive yet.
