SONO

Major Shareholder Coliseum Capital Invests $1.87M in Sonos ($SONO) After 45% Stock Plunge

04/08/2025 06:05

Major shareholder Coliseum Capital has stepped in with nearly $2 million in purchases of Sonos ($SONO) shares amid a sharp decline in the audio equipment maker's stock price. Sonos has been going through challenging times over the past several months. The company's stock closed at $8.90 on April 3, 2025, before falling further to $8.60 the following day, representing a decline of almost 45% from levels above $15 a year earlier. Against this backdrop, Coliseum Capital Management purchased approximately 209,663 shares across transactions on April 3 and April 7, 2025. These purchases, averaging around $8.9 per share, totaled about $1.87 million. Sonos, known for its premium smart speakers and home audio systems, suffered a major blow to customer trust following a failed app update in May 2024. This issue went beyond a mere technical glitch and significantly impacted the company's overall operations. The app failure ultimately led to the resignation of CEO Patrick Spence in January 2025, with Tom Conrad appointed as interim CEO. The company also announced a restructuring plan that included cutting its workforce by 6%. Sonos shares fell more than 8% following the CEO resignation announcement, reflecting investor concerns. Notably, prior to Coliseum's substantial purchases, several Sonos executives sold shares between June and November 2024. Director Joanna Coles made three separate sales, officer Christopher Scott Mason sold twice, and executives Nicholas Millington (CINO), Shamayne Braman, and Maxime Bouvat-Merlin (CPO) each participated in sales. These insider dispositions may have reflected internal perspectives on the company's app-related challenges and performance decline. Financially, Sonos presents mixed signals. In its most recent earnings report in February 2025, the company posted earnings of 40 cents per share, significantly exceeding analyst expectations of 15 cents. However, revenue declined 10.1% year-over-year to $550.86 million. With a market capitalization of approximately $1.28 billion, Sonos currently reports trailing twelve-month revenue of about $1.46 billion and a net loss of $68.86 million. On the positive side, Sonos maintains a debt-free financial position, limiting short-term financial risks. The company's price-to-sales (P/S) ratio stands at 0.9x, which could be considered undervalued by historical standards. Coliseum Capital's substantial purchases suggest that the long-term value investor believes Sonos shares are significantly discounted relative to the company's intrinsic value. Following these transactions, Coliseum holds over 12 million shares, representing a significant stake. Sonos' challenges ahead include resolving its app issues and rebuilding customer trust while appointing a new permanent CEO to reestablish the company's direction. Additionally, it must maintain and expand its position in the premium audio market amid strong competition. Investors should watch for announcements regarding new leadership, progress in customer trust restoration efforts, and upcoming quarterly results throughout 2025. While the participation of value investors like Coliseum Capital demonstrates confidence in the company's long-term value, short-term stock volatility may continue.

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