Summary
iRobot has experienced rapid growth over the past few years.
iRobot is currently a one-trick pony.
iRobot does have dominant market share.
Both growth and market share are likely to decline in 2019.
With iRobot's lofty valuation, there are simply safer and better places to invest your money.
Recently, David Zanoni penned an article entitled, "iRobot (IRBT), Proving the Skeptics Wrong". Now, David is a good writer and very likely a good investor. However, as an ex-stockholder and an author who has written about and followed the company very closely over the past 15 months, I will provide seven reasons why the stock, at these levels, is too rich for my blood. It is healthy to consider both the bull and bear arguments before making an investment and I encourage you to read both articles and make your own decision regarding the stock.
First of all, the title "Proving the Skeptics Wrong" implies that iRobot has been outperforming. The truth is that there have been plenty of skeptics as well as strong proponents of the stock for quite a while and any analysis of performance depends entirely on the starting date you use. If you look at iRobot from mid-December until now, you will find a stock that is up 9.82%, outpacing the S&P 500 by three percentage points. However, if you take a 12-month view, you will see a stock that has declined by 20%. In fact, iRobot's stock is 4% below where it was trading a day after it suffered a 15% one-day drop on the heels Shark Ninja's entrance into the market.
