Buy SONO Stock…But Don’t Buy Sonos Audio System

When evaluating stocks to buy, investors oftentimes need to remember the old trading saying, “The stock is not the company, and the company is not the stock.”

wall of speakers

This year for Father’s Day my wife bought me a Sonos Move, which is a wireless speaker that is touted as having brilliant sound with voice and app control. I was thrilled with this gift as our previous wireless speaker was good, but not great.

Unfortunately, while my wife’s gift was very generous, for months we have not been thrilled by the Sonos product—the sound is okay, but the voice and app control features are horrible. I think our Sonos ignores our requests (“play Fleetwood Mac!”) more frequently than our pre-teen daughter (“no, you may not post videos to YouTube!”) does, which is really a high bar to clear. Our experience with the Sonos Move has been so bad that we wish we hadn’t thrown away our five-year-old wireless speaker device.

My Thoughts on SONO Stock
While I hate my Sonos product, I do love the prospect of SONO stock trading higher in the months to come following a blowout earnings report and big stock move higher.

Option activity has been very bullish, targeting nearly every upside strike, in every expiration cycle, including this trade I made:

Buyer of 1,000 Sonos (SONO) January 30 Calls (exp. 2022) for $3.40 – Stock at 21.5

While I think the market looks just okay right now, I do like the way SONO has traded following earnings, as well as the fairly inexpensive options, and am going to take a shot that SONO could be a new earnings season star.

The risks I see in this trade are general market risk, as well as the possibility that the SONO earnings pop could fail. Also, much like Cloudflare (NET), and countless other recent earnings season winners, it is possible that SONO could chop around aimlessly in the days/weeks ahead if the market doesn’t get going.

However, SONO stock has been taking off, breaking above its earnings highs, and I continue to hold half, with the plan to go for the home run on the balance.

And while I anticipate returning our Sonos Move audio system, based on the stock strength and overwhelmingly bullish option activity, I’m hoping to ride SONO stock to even more new highs in 2021.


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