SharkNinja sees big stock drop even after beating Wall Street estimates
What’s a CEO got to do to impress Wall Street?
You can’t blame SharkNinja boss Mark Barrocas for asking himself that question. On Thursday, Barrocas reported third-quarter earnings that beat the analysts’ estimates. Ditto for third-quarter revenue. And perhaps more important for forward-looking stock investors, Barrocas raised the Needham-based consumer products company’s sales guidance for the full year, from previously estimated growth of 20 to 22 percent to an updated range of 25 percent to 26 percent. Plus, the launch of the Ninja Crispi air-fryer cooking system last month was a big success. What’s not to like?
Well, apparently, there was something. Shares in SharkNinja dropped 17 percent on Thursday. Sure, to some extent, the stock was due for a bit of a correction, to use investor-speak: Even after Thursday’s selloff, the stock traded at more than $90 a share, or nearly twice its value at the start of the year. Some profit-taking (selling shares to take advantage of a sharp runup), to use another Wall Street term, might have been inevitable.
Maybe it was Barrocas’s brief, broad statement on an earnings call that consumers will remain cautious with their spending this holiday season. Or maybe it was the messaging from Barrocas and CFO Patraic Reagan that the company is going to have what Barrocas calls “elevated spend levels” in the fourth quarter that prompted the selling. They said the company is investing more in R&D, building out its European business, and adjusting its supply chain. On that last front, SharkNinja is shifting all of its US-destined manufacturing work away from suppliers in China to other Asian countries such as Vietnam and Cambodia, to avoid tariffs. Moving that kind of work costs money.
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“For the next two quarters, we’re really going to put our foot on the gas and really make some changes … in our supply chain that will set us up for long-term growth,” Barrocas said in an interview. “We can’t manage our business based on the stock price. We just have to do what’s right for the business long-term.”
This is an installment of our weekly Bold Types column about movers and shakers on Boston’s business scene.
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Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.